After months of speculation, we finally know what the new 2009 high balance conforming loan limits are for San Diego and other "high cost" areas.  The Federal Housing Finance Agency (FHFA) said that the $697,500 number we enjoyed for part of 2008 is dropping to $546,250 in San Diego.

Some areas such as Los Angeles-Orange Counties, San Francisco, San Jose, and Santa Cruz are having their 2009 numbers set at the new maximum of $625,500.

According to FHFA's press release, the 2009 loan limits were calculated using 115% of median house prices as determined by the Federal Housing Administration (FHA) whereas the 2008 loan limits were calculated using 125% of median house prices.

So what does this mean? It means that anyone currently in escrow in San Diego with plans to borrow more than $546,250 needs to do everything they can to get their loan closed before 12/31/2008 or face significantly higher interest rates.  There is almost a 2% interest rate difference between loans less than $697,500 and loans greater than $697,500 (also known as true jumbo loans) because conforming loans are guaranteed by the government (FNMA and FHLMC).  Guidelines are also more strict for true jumbo loans than for conforming and high balance conforming loans.

As expected, the Federal Housing Administration (FHA) announced that FHA Jumbo limits will match the high balance conforming limits.  The Department of Veteran's Affairs (VA) said that VA Jumbo loans with zero-down payments will be allowed up to the high balance conforming loan limits through the end of 2011.  This is good news for FHA and VA buyers as they will still be allowed to take advantage of these programs for higher priced properties.

Any questions or comments?  Please email me at kkueneke@primeres.com