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Loan Limits Increased Greatly For San Diego County Residents
On November 28, 2017, the Federal Housing Finance Agency announced that it would raise the baseline conforming loan limit for 2018, for most counties across the country. They are also increasing the limits for certain “higher-cost areas” that are above the baseline, like San Diego county. This is in response to significant home-price gains that occurred during 2017.
In most counties across the country, the 2018 maximum conforming loan limit for a single-family home will be $453,100. That’s an increase of $29,000 from the 2017 baseline limit of $424,100. This marks the second year in a row that federal housing officials have raised the baseline.
In higher-cost real estate markets, like San Diego county, the limit for a single-family home loan can be as high as $649,750. This limit has increased for VA, FHA and conforming loans. Allowing San Diego county residents to barrow significantly more money when buying a home with one of these types of loans. Anything above these caps is considered a jumbo mortgage.
What Is a Conforming Loan?
A conforming home loan is one that meets, or “conforms” to, certain guidelines set forth by Freddie Mac and Fannie Mae.Freddie and Fannie are the two government-sponsored enterprises (GSEs) that purchase mortgages, bundle and securitize them, and then sell them to investors through Wall Street and other channels.
When a loan meets the purchasing criteria used by the GSEs, it is said to be a conforming loan.There are various criteria used to define a “conforming” mortgage product. But the size of the loan is one of the most important criteria, from a borrower’s perspective.Freddie Mac and Fannie Mae will only purchase loans up to a certain amount. These maximum amounts, or limits, vary by county and are updated every year.
‘Jumbo’ Mortgages Are Still Widely Available
Borrowers who wish to obtain a mortgage loan in an amount thatexceeds the 2018 conforming limits still have options. When a home loan exceeds the caps set by the Federal Housing Finance Agency, it is referred to as a “jumbo” mortgage product, and it cannot be sold to Fannie Mae or Freddie Mac.
Jumbo loans are still widely available in the U.S., but the qualification criteria are generally stricter for these products due to the higher level of risk involved.
Jumbo mortgage products do not meet the underwriting guidelines set forth by FHFA, so they are not eligible for purchase by Fannie Mae and Freddie Mac. As a result, eligibility requirements are often more stringent with these larger “non-conforming” loans. Lenders often require higher income and larger down payments for jumbo loans, though the specific criteria vary from one lender to the next.
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