2018 started off on a high note for those who want to buy or refinance a home in San Diego due to new loan limits. These new loan limits affect conventional, FHA, and VA loans. This is good news for prospective home buyers and those who currently own and are considering a refinance. Let me explain the new loan limits and benefits further.
2018 Loan Limits for San Diego County
San Diego County saw a nice increase in our loan limits across the board due to the continued strength in our Real Estate market. After all, we were in the top 4 metro cities last year in appreciation. Here are the new limits for conventional conforming, FHA, and VA loans in San Diego:
Traditional Conforming – $453,100 Put down as little as 3%
High Balance Conforming – $649,750 Put Down as little as 5%
FHA Loan – $649,750 Put Down as little as 3.5%
VA Loan – $649,750 0% Down Payment Required
2018 Traditional Conforming Loan Limit
The traditional conforming loan limit, which is the same across the nation, saw an increase to $453,100. This is the 2nd year in a row that we have seen an increase. The limit had been at $417,000 since 2006 before the increase last year. This program allows buyers to qualify with as little down payment as 3% or homeowners to be able to refinance with as little as 3% equity in their house.
2018 High Balance Conforming Loan Limit
The high balance conforming loan is in place for counties throughout the nation that are considered “High Price” by the Federal Housing Finance Agency. These loan limits can be different for each county. In San Diego, the 2018 high balance conforming loan limit is $649,750. This program allows buyers with as little down payment as 5% or homeowners to be able to refinance with as little as 5% equity in their house. Rates are typically .125% – .25% higher on this program with good credit than the traditional conforming program.
2018 FHA Loan Limit
The 2018 FHA Loan Limit in San Diego County is $649,750. The FHA mortgage allows as little down as 3.5% and allows lower credit scores, higher debt to income qualifying, and shorter waiting periods after previous credit issues than conventional financing. Imagine being able to buy your dream home in San Diego county for $673,000 with as little down as $23,555 which can all come from a gift.
2018 VA Loan Limit
The 2018 VA Loan Limit in San Diego County is also $649,70. The VA program is for current active military or veterans. The VA program allows financing up to 100% up to the loan limit of $649,750. VA loans are available up to $1.5 million with a down payment which will be less than traditional jumbo loans. VA mortgage rates are also very competitive.
How will the New Loan Limits Help Buyers
With the continued appreciation of homes throughout California and San Diego in 2017 and going into 2018, sales prices have continued to go up as well. Buyers were having to obtain larger loans or put more money down to be able to qualify under the previous loan limits. Now a buyer may be able to purchase a home using either a conforming, FHA, or VA loan instead of a Jumbo Loan which traditionally requires larger down payments, more cash reserves, stricter income qualifying, and higher rates.
Imagine Mr. and Mrs. Nelson trying to buy a home in the competitive San Diego real estate market. They can now get a conforming loan of $649,750 to buy their home with as little down as 5% and only a couple of months reserves and be able to qualify with a debt to income ratio of 45%-50%. Before, at that loan amount they would have had to get a Jumbo Loan which typically requires 20% down (although there are some special programs that allow as little as 10% down), 6 – 12 months of reserves for their entire housing payment, and debt to income ratios of 43% or less to get the best rate.
Or consider Mr. and Mrs. Hernandez who were looking at buying a home for $935,000 and had the 20% down requirement for a Jumbo Loan, but did not have another $30,000 of reserves available. Now, they can buy that same home using the high balance conforming loan program, put 20% down, and not have to worry about the extra funds for reserves or the stricter underwriting guidelines.
The increase in the traditional conforming loan limits will really help first time buyers in San Diego who were falling short on the loan amount available due to the rising home values. First time buyers will now be able to qualify with as little as 3% down up to a $453,100 loan amount without having to go to the more expensive High Balance program or FHA financing.
If you would like more information on the new loan limits and how it may help you obtain your dream of homeownership, please give me a call at 619-312-0612 or contact me HERE. You can also fill out the Free Quote form on the right of the page.
How will New Loan Limits Help Homeowners
The new 2018 loan limits will help current home owners in San Diego and throughout California when it comes to refinancing as well. With the higher limits, clients will be able to refinance loans that were previously High Balance loans into a lower rate with a traditional conforming loan. Same thing would apply with homeowners who have a jumbo loan. They may now be able to refinance into one of the other options at a lower rate if the loan amount falls under the higher limits.
Homeowners who have adjustable rate equity lines or higher rate fixed seconds may now be able to combine those with their first mortgage into one loan with the higher limits now. This could save them thousands of dollars with the fact that the rates on equity lines are increasing.
Homeowners can now also access more equity on a cash out refinance if they need to payoff credit cards or do home improvements. The fact that there is $29,000 more available on the traditional conforming loan limit or $36,800 more available on the high balance, FHA, or VA loans could mean the difference of the loan working this year, when last year a refinance was not possible. If you would like to see if the new loan limits helps you be able to refinance, please contact me.
Loan Limits in other Southern California Counties
Loan limits in other Southern California Counties also increased. The areas that could benefit the most are Riverside County and San Bernardino County. These two areas had been stuck at lower loan limits for years and many buyers or homeowners in those areas where not able to take advantage of lower rates over the last several years due to the low loan limits. If these new loan limits will help you, please feel free to give me a call at 619-312-0612. You can also fill out the Free Quote form on the right of the page.
Conforming Loan Limits 2018
FHA Loan Limits 2018
VA Loan Limits 2018
As a San Diego Lender helping clients with home loans for 16 years, I look forward to answering any questions you may have or assisting you with your next mortgage.