FHA, Fannie Mae and Freddie Mac - New Loan Limits Released

I know, alphabet soup… Welcome to the world of government acronyms and abbreviation. In lay terms, the 2008 Economic Stimulus Bill has cleared the way for three channels of mortgages (FHA, Fannie Mae & Freddie Mac) to increase their loan limits. Good news for most of California because these three types of loans generally have lower interest rates and/or easier qualifying criteria and/or higher loan-to-value limitations (the amount of a mortgage relative to the value of the home).

Earlier this week, HUD (Housing and Urban Development) released the new FHA (Federal Housing Administration) loan limits for California, with the remainder of the country soon to follow. (You can read more about the FHA limits at this link.) And today, the OFHEO (Office of Federal Housing Enterprise Oversight) that oversees Fannie Mae and Freddie Mac announced the loan limits for those counties and Metropolitan Statistical Areas (MSAs) that are affected by the new loan limits. Data for all areas are available on the HUD Web site at this link.

Ten counties in the greater Bay Area will have their limits raised to the new maximum loan limit of $729,750 for all three types of loans (FHA, Fannie Mae, Freddie Mac). Those 10 counties are: Alameda, Contra Costa, Marin, San Francisco, San Mateo, San Benito, Santa Clara, Santa Cruz, Napa and Monterey.It will still take time before anyone can act on the new, higher, loan limits. How long? We don’t know yet, but our speculation is in the next 4-8 weeks. And we still don’t know how these loans will be priced (i.e. interest rate you can get). Although most lenders can do conventional (Fannie Mae & Freddie Mac) loans, not all lenders can do FHA loans. So don’t assume your friendly mortgage broker necessarily can. This is good news for the CA real estate and mortgage markets. It won’t solve all California issues, but it certainly will help.