Because Fannie and Freddie aren't allowed to turn jumbo loans into guaranteed securities that are purchased by investors, those loans are costlier and harder to obtain.
That's an especially acute problem in high-cost markets like California, where many homes are priced well above the conforming loan limit.
Jumbo and conforming rates should move in sync, although the margin between conforming and jumbo loans won't necessarily narrow.
Those seeking a loan that falls within Fannie and Freddie's limits must still cope with higher fees and tightened underwriting standards instituted during the downturn.
Many borrowers are being told to bring larger down payments to the table, if they can get a loan at all. Fannie and Freddie have eliminated zero-down loans, and many private mortgage insurers are requiring minimum down payments of 5 percent in declining markets.
Now - when purchasing investment properties - borrowers can't use rental income from the property to qualify unless their loan-to-value (LTV) ratio is 70 percent or less.
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