What are these limits?
… and more importantly, what do these limits mean for you?
We hear these questions from our clients frequently, and for purchasers, the answer has important implications for they type of home you may be able to buy.
So for the next couple minutes, let’s look at the San Diego conforming loan limits, and how they affect you, the borrower.
How Conforming Loan Limits Affect Your Purchase
Simply put, it’s more difficult to qualify for high dollar home loan amounts. More specifically, there is a certain threshold where loans become harder to qualify for.
… It’s called the Conforming Loan Limit.
Once a loan surpasses this limit, you’ll have to get what’s called a “jumbo loan“. This can be problematic for some borrowers since jumbo loans typically require a bigger down payment to qualify and better credit, among other qualifying factors.
For example, in 2013, the conforming loan limit in most areas around the country was $417,000. So as long as your loan did not exceed this amount, you wouldn’t be subject to the jumbo loan qualifications.
What are the San Diego Conforming Loan Limits in 2014?
Once you start talking about the limits in San Diego, you have to distinguish between the standard limit and a special limit for our county.
- General Conforming Loan – The limit found in most areas in the U.S.
- High Balance Loans (This one is for you, San Diego) – If you live in a high priced area such as San Diego, higher limits are usually available without the loan becoming a jumbo loan.
At least to start 2014, the conforming loan limits for San Diego County will remain at $417,000. The loan limit for the San Diego high balance conforming loan program will be at $546,250.
The Federal Housing Finance Agency (FHFA), which is a federal agency that regulates Fannie Mae and Freddie Mac has stated though, that their goal is to lower the loan limits offered by these entities. They have agreed to give a 6 month notice if changes to the loan amounts will occur. This should help with the transition if the reductions do occur.
Compare this to what happened with the FHA loan limit in San Diego. There was little notice given before the upper loan limits were decreased by over $150,000. The only loan program to have loan limits increased for 2014 is the VA program. The VA limit was increased to $527,500 for 100% financing.
If you would like to take advantage of the current loan limits before they potentially decrease, request a free rate quote HERE.
How Do San Diego Conforming Loan Limits Affect My Purchasing Power?
Mortgages that exceed the San Diego high balance loan limits of $546,250 will fall under Jumbo Loan guidelines. These loans will be subject to lower loan to value ratios of 75-80% and debt to income ratios and will require higher reserves.
Do I Want the House for $575,000 or $565,000?
Say for instance, you wish to purchase a home for $575,000 in San Diego County. You have $20,000 for a down payment. That means you would have to finance $555,000, which would be a Jumbo Loan, and need to be able to qualify for the tougher underwriting requirements mentioned.
However, if you purchased a very similar home for a purchase price of $565,000, just $10K less, you’d have an easier time qualifying.
So if you’re looking to buy a home, use this formula to see if you’ll run into problems with conforming loan limits:
(A) Value of Home – (B) Down Payment = (C) Amount Financed
… if C is < $546,250, you’re fine
… if C is > $546,250, you need a jumbo loan
Will I Qualify for a Jumbo Loan?
The best thing you can do is speak to a knowledgeable broker about your personal situation. There are a lot of factors to weigh.
As a San Diego Mortgage Broker, I have access to all the above loan options; traditional conforming, high balance conforming, and true jumbo loans. Rates are still great and options are available to get you pre-approved.
Please give me a call at 619-312-0612 with questions.
There is a chart below that shows the 2014 conforming loan limits for other areas of California as well.
|County||One Unit Limit|
|SAN LUIS OBISPO||$561,200|