Everything old is new again.
Conforming mortgages are limited by loan size, based on “typical” housing costs around the country. The current conforming limit on a single-unit property is $417,000.
In 2008, as part of the Economic Stimulus Act of 2008, Congress authorized conforming loan limits increases in “high-cost” areas around the country. In Los Angeles County, for example, a mortgage could be as large as $729,750 and still be considered “conforming”.
Those temporary increases rolled back effective January 1, 2009, to a maximum of $625,500.
However, as part of the American Recovery and Reinvestment Act of 2009 signed into law this week, conforming loan limits in high-cost areas have been returned to their elevated levels of 2008.
You can see the text on the bottom of page 111 of 407.
Changes to conforming loan limits impact everyone with a stake in real estate, even if their neighborhoods are not considered “high-cost”. This is because conforming mortgages offer the widest selection of home loan products, and often at the lowest rates. The widespread availability of conforming mortgages helps to support home sales nationwide as well as providing ample refinancing options for people that need it.
Lenders have yet to pick up the change, but are expected to shortly. Once they do, more homeowners will be eligible for cheap home financing.
To lookup your neighborhood’s conforming loan limits, visit the HUD Web site. Or, if you have specific questions related to your home or an upcoming purchase, contact me directly anytime.