posted by Matt Padilla, Orange County Register Reporter
Beginning tomorrow, San Diego County’s limit on loans insured by the Federal Housing Administration will be temporarily raised to $697,500, almost double the current limit of $362,790, the U.S. Department of Housing and Urban Development announced today.
The limit, which is good until the end of the year when it reverts back to $362,790, will apply only to loans insured under a program administered by FHA, which targets low to moderate-income home shoppers.
HUD will announce tomorrow the new conforming loan limit for San Diego County and other markets, a spokesman said. Conforming loans are sold to government-sponsored buyers such as Fannie Mae and Freddie Mac and have a current limit of $417,000 in California and most states.
The FHA and conforming limit increases could give San Diego County’s housing market a boost. Rates on jumbo loans, which are above the limit, have risen to about a percentage point above conforming rates.
But Fannie Mae and Freddie Mac have yet to say when they will begin buying larger loans or if they will impose any restrictions, such as requiring larger down payments. Some housing watchers say rates on loans up to the new limit might not drop as much as government officials hope.
President Bush signed a stimulus package into law last month that included granting HUD the power to raise the conforming limit based on 125% of the median home price in high-cost areas. HUD said today San Diego County’s median home price is $558,000.
HUD said it calculated median prices based on government and commercial data.
HUD tomorrow is expected to release limits for areas in other states.