Jumbo-Conforming Loan Limit Set to Change in October!

Posted by Lisa Mallon on Tuesday, May 31st, 2011 at 11:24am.

I wanted to make you aware of a highly significant change to the jumbo- conforming loan limits that are presently set to take effect on October 1, 2011. Both Marin buyers and sellers will feel the effect of this change. The loan limit will be decreased from $729,750 to $625,500. Should this change go into effect, here’s what can be expected:

Currently, buyers with strong credit, income and a 20% down payment can borrow up to $729,750 with relative ease and very favorable rates. FHA borrowers can borrow up to $729,750 with a minimum down of $3.5%. As of October 1, 2011, maximum financing for both jumbo-conforming and FHA will be limited to $625,500. Loan balances in excess of this amount will fall into traditional jumbo programs. The net effect of this change to buyers is a 33% reduction in jumbo-loan capacity, fewer buyers qualifying for conventional financing and the requirement of larger down payments.

The impact to sellers will be felt dramatically as well. Those sellers with homes listed between $910,000 and $780,000 will see the largest impact. The net effect of these changes means additional downward pressure on sales prices as fewer buyers are able to qualify for conventional financing. On October 1^st, homes listed between $780,000 and $520,000 that attracts buyers with 20% down will now be eligible for jumbo-conforming financing under the new limits.

Based on the foregoing, now is a great time to think seriously about purchasing a home! If you aren’t already working with a mortgage professional to determine your purchasing power, there is no time like the present! I work with a number of highly regarded mortgage professionals and am happy to pass along their names.

I work with both buyers and sellers and enjoy keeping my clients well-informed. Call me at (415) 601-7281 to discuss any questions or concerns about this important change to the loan limits and how you might position yourself to take advantage of existing favorable mortgage rates while you still can and purchase that home you've been thinking about.