October 19, 2017

Countdown to September 30th Loan Limit Changes

I can almost certainly promise you that the world won’t end on September 30th, 2011.  What will end is the ability for a homeowner in San Diego County to borrow up to $697,500 on their 1 unit residence under Fannie Mae guidelines.  As expected the temporary Federal Housing Finance Agency (FHFA) increase that went into effect in October 2008 will come to an end on September 30th, 2011.  In most cases, all that really means is that if you are currently in escrow on one of these transactions, your loan likely needs to fund by September 30th for you to take advantage of these specific Fannie Mae rates and program guidelines for your loan amount.

FHFA loan limits vary by county, so the $697,500 temporary limit discussed here may not apply if your home is located outside of the San Diego County Metro.  For example, the temporary limit for Riverside County was only raised to $500,000 over the same period, and will be reduced after Sept. 30th back to the $417,000 standard.  San Diego County’s Limit will be reduced to $546,250.

To further clarify, beginning October 1st, 2011, a consumer applying for a mortgage on a single unit property in San Diego County will need to work with a lender who offers “Jumbo” loan programs if their loan amount (not purchase price) is going to exceed $546,250.

In recent years, not all lenders offered Jumbo loans programs, and those who did, had generally tighter restrictions to qualify and offered higher rates than the Fannie Mae rates.

Fortunately this change to the Fannie Mae limit comes at a time when there has been a recent resurgence of Jumbo loan products. In recent months many more lenders are offering Jumbo loans again, and the Jumbo interest rates (while still at a slight premium compared to conventional Fannie Mae rates) are falling closer in line with the current market rates for conventional mortgages.  Even some of the Jumbo guidelines seem to be loosening up!

So if you were concerned this change would have a dramatic effect on your ability to borrow money, you can rest easy. While you may see a slightly higher interest rate than your neighbor who is only applying for a $417,000 loan, you’ll still be able to find a fair financing option for that dream home.

If you’d like more information about the availability of Jumbo programs and their interest rates, please contact me at my direct line (858) 349-4842.

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