If you were thinking to buy a house above 450-500k mark, think again.
Fannie Mae has explicitly announced that it will stop buying jumbo-conforming mortgages on December 31st. Presumably Freddie will do the same. Jumbo-conforming are being phased out in favor of higher-limit conforming loans as authorized by the Housing and Economic Recovery Act of 2008.
There’s just one problem. Higher conforming limits will not apply to San Diego because it’s no longer a high-cost area.
Seriously.
New conforming limits are equal to the greater of $417,000 or 115% local area median home price, capped at $625,500. FHFA wil announce exact loan limits for all areas (including San Diego) on November 7th. We can make an educated guess. California Association of Realtors says that median price of a single-family detached house in San Diego in September was $373,620. That would make the new limit 430k, possibly even lower.
The same 115% local median home price rule will apply to FHA loans as well.
This is major, for two reasons.
(1) FHA ceases to be a major funding source for high-end buyers with small downpayments. Private lenders don’t seem too eager to loan unless you have a good downpayment, either. I’m not sure about VA.
(2) Current private jumbo rates are 1-1.5% higher than conforming rates.
