Mortgage Topics

The temporary higher conforming loan limits of $729,750 established for certain “high cost” areas as part of the 2008 Housing and Economic Recovery Act have been reduced. The new 2009 higher conforming loan limit is $625,500 for 1-unit properties in “high cost” areas (see Reliance Financial Newsletter: August, 2008).

Most Bay Area counties with the exception of Sonoma and Solano fall under this “high cost” area designation. You can look-up your specific area's conforming loan limit on the HUD website.

The following additional facts are important to keep in mind regarding the higher conforming limit loans:

• Loan amounts between $417,000 and $625,500
• Borrowers will not qualify with a debt-to-income ratio greater than 45%. All loans are only full documentation
• Rates are generally 0.125% to 0.375% higher compared to the standard conforming loan of $417,000
• The maximum number of properties financed with any lender is 4
• The minimum credit score required to qualify for a 80% loan-to-value mortgage is 700
• Maximum cash-out is $100,000

The Federal Housing Finance Agency also recently released the standard conforming loan limits for 2009. There are no changes to these loan limits from 2008, for most areas in the US. The limits are as follows:

• 1-unit properties : $417,000
• 2-unit properties : $533,850
• 3-unit properties : $645,300
• 4-unit properties : $801,950