Conforming mortgages are limited by loan size, based on “typical” housing costs around the country. Since 1980, as home prices have increased, so have conforming loan limits.
The current conforming limit on a single-unit property is $417,000.
Earlier this year, as part of the Economic Stimulus Act of 2008, Congress authorized conforming loan limits increase in “high-cost” areas around the country. In Los Angeles County, for example, a mortgage can be as large as $729,750 and still be considered “conforming”.
But beginning in 2009, those increases roll-back. Effective January 1, conforming mortgage in high-cost areas will be limited to $625,500.
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 ands provide ample refinancing options for homeowners that need it.
Starting with the New Year, fewer people will be eligible.
To lookup the conforming loan limits in your neighborhood, visit the HUD Web site. If you have specific questions related to your home or an upcoming purchase, contact me directly anytime.