As 2025 begins, the historically low housing inventory continues to drive up prices nationwide. However, the pace of home price appreciation has slowed, with prices increasing by 4.5% from October 2023 to October 2024 – two percentage points lower than the growth recorded between October 2022 and October 2023, according to the Federal Housing Finance Agency (FHFA). Due to the rise in home values during this period, the FHFA has announced an increase in the maximum baseline conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac for 2025. A conforming loan refers to a mortgage that meets the eligibility requirements for purchase by these entities.
Increases in loan limits are determined for each county in the country. The conforming loan limits for Boulder County, Larimer County and Weld County for 2025 are listed in the table above.
When a loan exceeds the “conforming loan” limit, homebuyers can explore what is commonly referred to as a jumbo loan. The pricing and availability of jumbo loans fluctuate with market conditions, and they often come with higher interest rates and stricter credit score requirements compared to conforming loans.
Buyers who exceed the conforming loan limit by a small margin might consider a strategy involving a first and second mortgage. This entails obtaining a first mortgage up to the conforming loan limit and a second mortgage to cover the remaining amount between the available down payment and the total loan needed. A licensed Mortgage Loan Officer can assist you in determining if this option is right for you.
Federal Housing Administration (FHA) Loan limits also increase in 2025
Homebuyers who qualify for FHA loans will also get the benefit of the new higher loan limits.
Interest rates have the greatest impact on boosting purchasing power
The 30-year FRM averaged 6.91 percent as of January 2, 2025, up from the prior week when it averaged 6.85 percent. A year ago, at this time, the 30-year FRM averaged 6.62 percent.
Most lenders will say that every time the rate changes .25%, a home buyer’s purchasing power changes about 3%. Since the interest rate is more than double the historic low, you can see it has drastically reduced the purchasing power.
However, it’s challenging to “out-save” an appreciating real estate market, as the rate of price increases often outpaces most buyers’ ability to save for a down payment. For this reason, it’s wise to enter the market as soon as possible, even if interest rates are not as favorable as they were in 2021. Reach out to your Realtor and lending professional to explore current financing options that can help you become a homebuyer – and ultimately a homeowner – sooner.
Duane graduated with a business degree and a major in real estate from the University of Colorado in 1978. He has been a Realtor® in Boulder since that time. He joined RE/MAX of Boulder in 1982 and has facilitated over 2,500 transactions over his career. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail duaneduggan@boulderco.com, call 303.441.5611 or BoulderPropertyNetwork.com
