Well, it looks like the “new and improved” stimulus bill will have an immediate effect on mortgages.  Fannie Mae (FNMA), Freddie Mac (FHLMC), and the Federal Housing Administration (FHA) have announced that they are reinstating last year’s high balance conforming loan limits.

For 2008, FNMA and FHLMC, as well as FHA, would insure loan amounts up to $697,500 in San Diego.  Any loan greater than that number was considered a Jumbo loan.  Unfortunately, that loan limit dropped to $546,250 effective for loans closing on or after January 1, 2009.  That meant that anyone looking to buy or refinance San Diego real estate could pay an interest rate as much as 2% higher than if borrowing the true conforming loan amount of $417,000.

However, the recently passed H.R. 1, also known as the American Recovery and Reinvestment Act, restores the higher limit of $697,500.  In some areas, such as Los Angeles and Orange Counties, the restored loan limit is $729,750 up from $625,500 earlier this year.

These higher loan limits are often referred to as Conforming Plus or High Balance Conforming loans.  FHA loans that exceed $417,000 in San Diego County may be referred to as FHA Jumbo loans.

This is great news for those borrowers that are looking to purchase or refinance in today’s low interest rate environment. Conventional buyer’s can now purchase a $775,000 home with only a 10% down payment.

Questions?  Please feel free to email me today.