November 20, 2009

Interested in a Home Loan Larger Than $417,000?

They are called Conforming Jumbo, Conforming High Balance or even Agency Jumbo. All terms referring to a home loan between $417,001 and $729,750 in high costs areas for a single family residence. It can be confusing because there are permanent loan limits and temporary loan limits throughout the U.S.

Fannie Mae and Freddie Mac raised their conforming loan limits in 2008 during the credit crunch to ensure liquidity for loans greater than $417,000 in high cost real estate markets. These temporary high balance limits have been in place since 2008 but were scheduled to expire at the end of 2009. Good newsthere will be no change for 2010. If allowed to expire, the temporary ceiling of $729,750 would have been reduced to the permanent ceiling of $625,500. For Sacramento, Placer and El Dorado counties, the temporary high balance limit remains at $580,000 through 2010. The permanent limit is $474,950. For most counties in the Bay Area it’s $729,750. The permanent limit is $625,500.

The reason for all the hoopla is because interest rates on loans that meet Fannie or Freddie limits, whether they be conforming or high balance, are priced significantly better than a Jumbo loan. Bottom line … it’s good for the housing market.

1) Temporary high balance loan limit of $729,750 established in the Economic Stimulus Act of 2008
2) Permanent high balance loan limit of $625,500 established in the Housing and Recovery Act of 2008