In neighborhoods where the median price of homes is higher than the national average, loan limits are higher as well. This enables buyers to purchase a home in a higher priced area of the country (such as coastal cities) without having to take a high priced jumbo loan.
The current limit for a high cost area is a loan of $729,750. However, that is set to end December 31, 2013.
The loan limit would then lower to $625,500.
Will Congress act to extend the high loan limits?
Since there are no crystal balls for mortgage, no one knows for sure. What we do know is that December 31 is not that far away, so if you’d like to purchase a home with a loan in the higher range, you might want to act now just to be safe. Contact your local Realtor who will act as your buyer’s agent to preview homes and negotiate a contract for you.
When taking a large loan, it’s more important than ever to get the best rate and terms. Recently, I helped a home buyer save over $2,000 in upfront fees when he used my Review and Coaching Service. For information on how you can have me review your cost estimate or Good Faith Estimate with a telephone consultation, click on the page above that says “Review My Estimate.” Because I do not do loans myself, I am an unbiased expert source, working on your behalf.
Fannie Mae and Freddie Mac have announced they will continue the higher loan limits through 2013. Fannie and Freddie are government-owned companies that provide money to banks and mortgage lenders. Accordingly, they set certain rules and guidelines, such as the maximum loan amounts.
Loan Limits are as follows:
$417,000: Maximum loan in areas that do not have a median home price higher than average.
$625,500: Maximum loan in the most costly counties of the country.
By contrast, FHA offers a higher max. loan for the most costly counties: $729,750. Last year, Congress raised FHA loan limits after being urged by the real estate industry to do so.
$506,000: Maximum loan for higher priced counties (King, Pierce, Snohomish) in WA state where I reside.
To find out what the limit is in your county, contact your local loan officer. If you know you’re not in a high-priced area, then you can count on $417,000 as the limit for a conventional loan.
For borrowers who require a larger loan, there are jumbo loan programs available. Typically, these require a higher interest rate and possibly a larger down payment. Pricing and guidelines vary.