President Obama signed the congressional resolution extending through 2010 the current conforming loan limits of $417,000 for most areas in the U.S. and $729,750 for high-cost areas, including San Jose. The counties of Santa Clara, Alameda, San Mateo, San Francisco & Contra Costa in the Bay Area will have the maximum loan amount at $729,750.Yesterday actions extends the higher conforming loan limits for Fannie, Freddie, and FHA loans through 2010.
The floor for FHA is $271,050; the floor for Fannie Mae and Freddie Mac conforming loan limits is $417,000.
“Home sales have shown significant movement upwards in the past six months and reduced inventory in some segments of the housing market, but not in all. Home purchases in the middle-income and higher brackets have not moved much, and those markets must improve before we can experience a fully sustained housing recovery. These higher loan limits will help motivate qualified home buyers to purchase in those markets,” NAR president Charles McMillan said.
These loan limits determine the maximum size of a mortgage that Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac can buy or guarantee and also the Loan Amount that FHA can insure.
On conforming loans we can expect 2 levels of pricing – the lowest for Loan Amounts up to $417,000 and slightly higher rate between $417,001 to $729,750. On FHA loans too the rate would be slightly higher in the latter category. Any mortgages with loan amount higher that $729,750 are called Jumbo loans and usually have higher down payment requirements as well as higher interest rates.
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