Conforming Loan Limits

County-by-County: The 2009 "High-Cost" Conforming Loan Limits

As part of the stimulus package passed last week, Congress authorized a temporary increase to conforming loan limits in certain high-cost parts of the country.

“High cost” is defined by a regions’ median sales price.

With the temporary increase, a greater share of Americans can now qualify for Fannie Mae- and Freddie Mac-backed loans, usually the least expensive source for mortgage money.

Higher loan limits can be good for the housing market and the broader economy for two reasons:

1. Cheaper money can spur new home demand, supporting home values.
2. Higher loan limits render more homeowners refinance-eligible, freeing up cash for spending, saving, or investing.

The complete county-by-county loan limit list is available on the OFHEO website.

Of the 3,232 U.S. counties, 10 percent are considered “high-cost”. Residents of these areas can expect the same low rates offered to the rest of the country, but with a slight premium. Be sure to ask your qualified mortgage planner about how it works.

Conforming Loan Limits

2009 Conforming Loan Limits Return to $729,750 in High-Cost Areas

Everything old is new again.

Conforming mortgages are limited by loan size, based on “typical” housing costs around the country. The current conforming limit on a single-unit property is $417,000.

In 2008, as part of the Economic Stimulus Act of 2008, Congress authorized conforming loan limits increases in “high-cost” areas around the country. In Los Angeles County, for example, a mortgage could be as large as $729,750 and still be considered “conforming”.

Those temporary increases rolled back effective January 1, 2009, to a maximum of $625,500.

However, as part of the American Recovery and Reinvestment Act of 2009 signed into law this week, conforming loan limits in high-cost areas have been returned to their elevated levels of 2008.

You can see the text on the bottom of page 111 of 407.

Changes to conforming loan limits impact everyone with a stake in real estate, even if their neighborhoods are not considered “high-cost”. This is because conforming mortgages offer the widest selection of home loan products, and often at the lowest rates. The widespread availability of conforming mortgages helps to support home sales nationwide as well as providing ample refinancing options for people that need it.

Lenders have yet to pick up the change, but are expected to shortly. Once they do, more homeowners will be eligible for cheap home financing.

To lookup your neighborhood’s conforming loan limits, visit the HUD Web site. Or, if you have specific questions related to your home or an upcoming purchase, contact me directly anytime.

Conforming Loan Limits

Mortgage Loan Limits Fall As Scheduled In "High-Cost" American Cities in 2009

As part of the Economic Stimulus Act of 2008, Congress authorized a conforming loan limit increase in “high-cost” areas around the country. Versus the national conforming loan limit of $417,000, for example, a Manhattan home buyer could secure a 2008 mortgage for $725,000 and still be within “conforming” guidelines.

Effective January 1, however, those limits rolled back. Conforming mortgages in the 59 designated high-cost regions are now capped at $625,500.

In non-high-cost areas, the 2009 conforming loan limits remain unchanged from 2008.

• 1-unit properties : $417,000
• 2-unit properties : $533,850
• 3-unit properties : $645,300
• 4-unit properties : $801,950

Loans in excess of these dollar amounts are often called “jumbo”, or “super jumbo” home loans, depending on their size. Jumbo home loans tend to be more costly than their conforming-sized cousins.