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Ken Patterson's Blog

By Ken Patterson | Broker in Rocklin, CA

Do you know about -- Jumbo Conforming loan limit changes October 1st?

Do you know about -- Jumbo Conforming loan limit changes October 1st?

Jumbo Loan Advice

We’re schedule for a reduction in the High balance or also known as Jumbo conforming  (and FHA) loan limits.  Thanks to the passing of the Dodd-Frank Legislation. 


Currently there are three main types of loans in the Placer County, Sacramento County and El Dorado Hills County in California:


We have the Normal Conforming loans (for loan amounts under $417,000)


Then we have the  High Balance Conforming Loans (for Sacramento, Placer and El Dorado counties others vary county by county) this is for loans amounts between $417,000-580,000.  These are slightly higher in rates than the regular conforming loans.


The next type we have is considered Jumbo financing.  This is not backed by Fannie Mae or Freddie Mac so it is up to each institution offering them to make up their own rules on this.  Generally, they’re just below about 5% in an interest rate as of August 2011 and are usually 25% down (Most of CA is still considered an at risk state for their determination). 


As currently proposed by the Dodd-Frank Legislation, we’re going to see a reduction from $580,000 for a loan limit to $474,900.  Basically this is taking us from a purchase price of $725,000 with a 20% down payment to a purchase price of about $594,000.  FHA will be going down from a purchase price of just over $601,000 with the 3.5% down to a purchase price of just over $492,000.   Keep in mind these are the loan limits, someone could put more money down to get to that level.

Just a friendly reminder for both buyers and sellers decide what course of action to take in this Real Estate Market.

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