The Sunset to High Conforming Loan Limits Approach in the Bay Area

The Sunset to High Conforming Loan Limits Approach in the Bay Area

Conforming Loan Limits lowered in 2011If you live in a high-cost area (Alameda County, San Francisco, Contra Costa County), keep an eye on your calendar. Effective October 1, 2011, temporary conforming loan limits will be lowered nationwide. Historically banks have adopted these guidelines up to 2 months sooner than the sunset date.

Bay Area loan limits range up to $729,750 currently.

The History

“Temporary loan limits” were enacted as part of the government’s 2008 economic stimulus package. At the time, the financial sector was entering its crisis and private mortgage lending had all but disappeared. Financing was scarce for both homeowners and home buyers for whom loan sizes exceeded Fannie Mae and Freddie Mac’s national $417,000 limit — even for those with excellent credit and income.

The issue was exacerbated in places like San Francisco where local home prices routinely topped $1 million. Buyers unable or unwilling to bring a substantial downpayment to closing (i.e. $600,000 or more) found themselves without financing.

The February 2008 package addressed this issue, using a math formula to change loan limits in the Tri-Valley and nationwide. The government assigned to each U.S. metropolitan area a temporary, new loan size limit equal to 25% greater than its respective median home sale price, not to fall below $417,000, and not to exceed $729,750.

Then, later that same year, the Housing and Recovery Act made “high-cost areas” permanent, but with a reduced 15% increase to median home prices, and loan sizes not to exceed $625,500.

These new limits take effect October 1, 2011 — one day after the temporary limits expire.

Jumbo Home Loan Market is Back

If you live in a high-cost area, therefore, 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.  Jumbo financing is far different than the high balance conforming loans when it come to qualifying. Traditional Jumbo programs while now available will only suit the extremely well qualified.  To get a Jumbo Mortgage Loan approval and not be behind the proverbial eight ball email me below to discuss it today.

Whether you’re planning a refinance or a purchase with in the next few month, keep an eye on the calendar.

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

Have a Plan Before High Balance Conforming Loans are GONE

If you’re shopping for a home or mortgage right now consider speeding up your time frame. Interest Rates are low and lenders are notorious for implementing new rules earlier than published dates so they don’t get stuck holding a note in the end . The risks of losing the program are always there, so act now. 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 with the mortgage process and take advantage of them today. 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