Fannie Mae and Freddie Mac – who buy mortgages from lenders on conventionally financed loans – increased conforming loan limits for the first time since 2006!
The Conforming loan limit will increase from $417,000 to $424,100.
The High Balance loan limit for San Diego County will increase from $580,750 to $612,950.
The High Balance loan limit for Riverside County will increase from $417,000 to $424,100.
VA and FHA have not yet officially announced whether or not they will be changing their high balance loan limits for 2017.
For a full list of the conforming loan limits by county, click here.
What are Conforming Loan Limits?
The Federal Housing Finance Agency (FHFA) publishes annual conforming loan limits that apply to all conventional mortgages delivered to Fannie Mae, including general loan limits and the high-cost area loan limits. High-cost area loan limits vary by geographic location. San Diego is considered a high-cost area to buy a home.
A mortgage for more than the conforming limit set by Fannie Mae and Freddie Mac is considered a jumbo loan – also known as a non-conforming loan. Lending standards are more strict for a jumbo loan when compared to conforming loan, so this increase in the confirming loan limits will make financing attainable to more people.
The underwriting process for jumbo mortgages is similar to that of a conforming mortgage, except that jumbo lenders sometimes require two appraisals instead of just one. Also, jumbo loans generally require higher down payments. Many lenders require a credit score of 700 or higher, a debt-to-income ratio of 43% or less, and 6 to 12 months’ worth of reserves.
Talk to a Loan Officer
The best place to start your home loan discussion is with a good loan officer. If you currently own a home, you may want to consider selling your home to capitalize on the strong real estate prices. You can use the proceeds of your sale as a down payment on a new home and lock in the low interest rates, while they last.