Conforming Jumbo Loans to a Maximum of $729,750 have been Extended until September 30th 2011.
This is a really big deal for the housing market. Without the extension of these conforming jumbo loans limits, properties with a sales price of about $520,000 would come to a screeching halt. When a buyer purchases a property for $520,000 with a $104,000 (20%) down payment they obtain a $416,000 loan which is less than the $417,000 conforming loan limit. To purchase a property above the $417,000 conforming loan limits, we need these higher jumbo loan limits. Conforming jumbo loan limits allow a buyer to purchase a home up to $912,000 with a $182,400 (20%) down payment. And even though $182,400 is a healthy down payment for just about any one these days, imagine what would happen to the market above $417,000 if the buyer could not get jumbo financing. In the case of a $912,000 sales price, a buyer would need a down payment of $495,000 and what do you think that would do to our housing market in so called high-cost areas such as southern California?
Even better yet, these higher loan limits extend to loans insured by the Federal Housing Administration otherwise known as FHA loans. The benefit of this extension is that a buyer can purchase a property with a 3% down payment up to a loan amount of $729,750. This means a buyer could purchase a property with a sales price of $752,000 and a down payment of only $22,560 (3%) and finance the balance of $729,440 . As you see , there obviously are many more buyers that meet the parameters of a $22,560 (3%) down payment versus a $150,600 (20%) down payment on a $752,000 sales price. In addition, a buyer could purchase a home with a sales price above $752,000 and still obtain an FHA loan as long as any additional increase in price above $752,000 was in a cash and where the FHA loan did not exceed $729,750. Of course with all these loan types a buyer must have a fully documented loan.
Luckily, buyers have an opportunity t purchase their dream home at reduced prices and lock in these jumbo loans at historically low rates.
