Conforming and FHA Loan Limits Drop In the Bay Area

Conforming and FHA Loan Limits Drop In the Bay Area

 

For homeowners in the San Francisco and East Bay Area, conforming and FHA loan limits have dropped by as much as 14 percent.

Effective October 1, 2011, the temporary mortgage loan limits that allowed for non-jumbo loan sizes of up to $729,750 are no longer.

$729,750 is above the “normal” loan limit of $417,000.

The elevated limits were put in place in 2008 as the economy and financial sector entered its crisis. At the time, there was little private money to serve buyers and would-be refinancers whose loan sizes exceeded Fannie Mae and Freddie Mac’s maximum $417,000 loan limits.

For most people whose loan sizes exceeded that threshold, mortgage financing was unavailable. There were no lenders to back the loan size.

This was of particular importance in places such as San Francisco, Pleasanton and Danville, CA. where home prices routinely top $1 million. For people in these areas, unless they had a downpayment that could lower their respective loan sizes to $417,000 or lower, mortgages were mostly unavailable.

Congress recognized this and, as a result, gave Fannie Mae and Freddie Mac temportary authorization to purchase and securitize home loans of up to $729,750 in value, depending on where the subject property was located.

The program helped housing, leading Congress to pass more permanent, location-specific loan limits. Later that same year, Congress passed the Housing and Recovery Act of 2009 which, in part, made high-cost loan limit pricing permanent, albeit at $625,500.

To look up the FHA high cost loan areas visit here.

The $729,750 temporary limits expired Friday, September 30, 2011. Today, the maximum allowable conforming loan size in the San Francisco Bay Area is $625,500.

If you live in the Bay Area, take note. Mortgage rates may be low, but the amount of loan for which you qualify may be less than you expect, and you may find yourself ineligible.

The complete list of high-cost areas is available online.

Have a Plan for your Purchase or Refinance in the Bay Area

I love to work with readers that find my information on the Mortgage and Housing Market helpful in your decision making process. As a Mortgage Planner at Vintage Mortgage Group in Pleasanton I am in a unique position to help you capitalize at any point in the market. Contact me below today to help you with your purchase or refinance

Subscribe to our daily mortgage market emails.

Have a Question?

Legal Disclaimer
Or give us a call
925-484-5363