Which of the following best describes how conforming loan limits are determined for high-cost areas?
Correct Answer
B) They are based on 115% of the median home price in the area, up to a statutory ceiling
High-cost area conforming loan limits are calculated as 115% of the area median home price, subject to a statutory ceiling. This allows for higher loan limits in expensive markets while maintaining a cap to prevent excessive risk to the GSEs.
Why This Is the Correct Answer
High-cost area conforming loan limits are calculated as 115% of the area median home price, subject to a statutory ceiling. This allows for higher loan limits in expensive markets while maintaining a cap to prevent excessive risk to the GSEs.
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