(Correction: Conforming limit to be announced tomorrow.)
Beginning tomorrow, Orange County’s limit on loans insured by the Federal Housing Administration will be temporarily raised to $729,750, more than 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 Orange 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 Orange 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.
The average rate Tuesday on a 30-year fixed conforming loan in Orange County was 5.841% with a one-point fee, while the average jumbo rate on a 30-year fixed was 6.908% with a one-point fee.
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 $729,750 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 Orange County’s median home price is $710,000. That’s much higher than DataQuick, which pegged the median home price in January at $520,000 for all houses and condos, and $583,250 for just resale houses.
HUD said it calculated median prices based on government and commercial data.
From HUD’s release, here is a list of each county in California, with the median home price and the new FHA limit on the far right. HUD tomorrow is expected to release limits for areas in other states.
Alameda County 995000 729750
Alpine County 438000 547500
Amador County 355000 443750
Butte County 320000 400000
Calaveras County 370000 462500
Colusa County 318000 397500
Contra Costa County 995000 729750
Del Norte County 249000 311250
El Dorado County 464000 580000
Fresno County 305000 381250
Glenn County 230000 287500
Humboldt County 315000 393750
Imperial County 260000 325000
Inyo County 350000 437500
Kern County 295000 368750
Kings County 260000 325000
Lake County 321000 401250
Lassen County 200000 271050
Los Angeles County 710000 729750
Madera County 340000 425000
Marin County 995000 729750
Mariposa County 330000 412500
Mendocino County 410000 512500
Merced County 378000 472500
Modoc County 125000 271050
Mono County 370000 462500
Monterey County 599000 729750
Napa County 615000 729750
Nevada County 450000 562500
Orange County 710000 729750
Placer County 464000 580000
Plumas County 328000 410000
Riverside County 400000 500000
Sacramento County 464000 580000
San Benito County 790000 729750
San Bernardino County 400000 500000
San Diego County 558000 697500
San Francisco County 995000 729750
San Joaquin County 391000 488750
San Luis Obispo County 550000 687500
San Mateo County 995000 729750
Santa Barbara County 615000 729750
Santa Clara County 790000 729750
Santa Cruz County 719000 729750
Shasta County 339000 423750
Sierra County 228000 285000
Siskiyou County 235000 293750
Solano County 446000 557500
Sonoma County 530000 662500
Stanislaus County 339000 423750
Sutter County 340000 425000
Tehama County 250000 312500
Trinity County 200000 271050
Tulare County 260000 325000
Tuolumne County 350000 437500
Ventura County 599000 729750
Yolo County 464000 580000
Yuba County 340000 425000
“HUD said today Orange County’s median home price is $710,000.”
LOL. That means a household would (conservatively) need $177,500 per year in income just to afford to buy the median home. Not realistic.
I’d love to see what exactly that “government and commercial data” says and how it was calculated.
Another government subsidy to prolong the credit crunch / weakening dollar / housing crisis. The FHA should be phased out. Its bad for the long term health of our economy. Politicians should protect our rights, not try to manage the economy.
http://www.investmentbinder.com/view-binder?id=kennycud
This would’ve put home prices in OC into stupid mode (more stupid) in the boom, but since banks are now only actually giving home mortgages to people who can actually afford them, including a huge downpayment and documented earnings, this will have very little effect except for the upper middle class and beyond. They will be able to get a lower interest rate loan no doubt for big ticket home purchases but for regular run in th mill home buyers, and specifically first time buyers, it’s like raising the loan limits to $10 million bucks. Home prices will continue the death spiral until it bottoms at below fair value, and then bounce up and stabilize at fair value, and then stay there for years. Plenty of time to jump in to get an affortable home in the future.
The conforming loan limit is raised, but what are the loan to value limits? Does this do any good to help the people who owe more than their house is worth?
Did I miss something? Where are the new loan limits posted? The HUD site still has 3/06.
Moral Hazard. Foisting loans off banks and onto the government - that is, taxpayers - backs.
The article says:
“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.”
Are you kidding me??? when does anyone consider someone who can afford a 729,000 house low to moderate income? To even afford that, you would really need 250,000 a year income- that’s no where near low to moderate.
Am I reading this wrong?
Thanks, but is HUD/FHA really comming to the rescue? or are they getting back into the game?. FHA has been so far out of the market since 1999 that it is ridiculus, and I think one could make a good argument that HUD/FHA is partly to blame for the mortgage meltdown, as they are the ones who pulled themselves out of the game leaving many buyers, especially first time buyers at the wiles of the sub prime lenders, as the typical FHA buyer had limited down payments and credit histories….But they did provide much better ARM loans i.e indexes were tied to T-Note (not libor) and most it could go up was 1% a year (hardly payment shock) and there were no pre-pay penalties and they would finance up to approx 97 - 97.5 LTV (small down payments - but could be gifted)…….Can you imagine where we would be now peoples payments were not doubling? and the payment covered PITI? and a small thing called MIP (monthly mortgage insurance at .50%)…..and all because they could not/would not keep up with home prices….generally FHA was at approx 80% limit of FNMA Conventional limit.
Now they want (out of fear) go to an extreme 125% of median sales price limits…..here is Stanislaus County currently at $339,000 ….the new increase would take us to $488,750 (small amount in o.c, I understand), but still at 125% of same measurement. The point in $488,000 at today’s depressed prices buy just about 90% of current homes listed on the MLS.
Thanks for the increase HUD/FHA, but would like to see you see you see you GET REAL, and get back to basics of what you are about, and then stay on top of it…….believe me, you really blew it is this past cycle and a lot of people are going to suffer over it, the consumer and business side.
I am frankly surprised you have avoided having to answer for your selves, as to where you were.
It will be interesting to see how many can afford to repay these loans
the last one I had the payment included principal, interest, FHA Ins, mandantory impounds for taxes and fire ins
Today started off with conformimg rates about 6%, after 2 price changes (due to worsening conditions) I can call it a day, rates now at 6.75%.
FHA loans are backed by the government (taxpayer) but they have very stringent guidelines on documenting income, debt-to-income ratios and other things. They demand 3 years previous tax filings, bank statements, accounting of your retirement savings, etc. and they insist on documenting where the (can be gifted) down payment is coming from and must be in the bank before the loan is approved.
One good thing about FHA is they are less focused on your stupid rip-off misleading FICO scores that caused many buyers to be errantly sucked into the sub-prime loans when they could have gotten FHA had the loan amounts been conforming.
An actual UPSIDE also is that FHA requires impounds for things like HOA fees, insurance, taxes and MIP to prevent the buyer from getting into a fix when they failed to save for their ridiculously property tax and mello roos payments.
Look at many current properties for sale and take a look at the OC assessors office records. You will find MANY properties on the market now with unpaid taxes dating back to 2006. Apparently the tax man will let you be delinquent on your taxes for up to 5 years before they come after your house so many in peril now are skipping the property taxes just to swing the mortgage payments.
The impounds eliminate this potential situation and the mortgage holder is more secure because they have been forced to properly qualify the buyer against the true costs of ownership rather than only against their interest-only loan payments.
As to the comment(s) about FHA being targeted to low and moderate income and yet the new limit is nearly $730,000, I can only assume politicos hope to expand FHA’s role in refinancing homeowners in trouble. The previously announced FHASecure plan opened the door to holders of adjustable-rate mortgages to attempt a refinance with FHA if they face a reset or their loans have already reset and they are behind on payments.
To Joey Aszterbaum and others: The loan limit increase will be the LESSER of the following: 125% of area median (LA/Orange County could be as low as $584,000 and still hit the max. loan limit of $729,750 so saying the median is $710,000 is irrelevant) OR current conforming limit ($417,000) x 175% so with Riverside/San bernardino coming in at $400,000, their loan limit rises to only $500,000. Also, these are for Fannie/Freddie guidelines as well as FHA so not all of these loans will be Gov’t insured. Since FHA loans ALL carry mtg. insurance, they are only worthwhile for subprime borrowers whom are subprime in credit score only but make a ton of money…at least at these nosebleed levels.
I agree with blackbox to a point…the bottom tier of the market is where the BIG pain has been…these increases do nothing for 1st time home buyers…only low rates (not gonna happen in the pro-inflation Bernanke Fed) and lower prices (happening as we type) will do that. This does however help those fortunate Jumbo Loan holders whom were either unable to refi into a NEW Jumbo loan due to the credit crunch OR higher rates on Jumbo’s (7.5% at PAR at the end of business today). Of course, rates on 30-year fixed conforming loans HAVE gone UP since Friday at PAR from 5.875% to 6.5% at the end of business today so if it keeps going that way it won’t matter to anyone what the new limits are…they’ll STILL be too high! Thanks Ben!
This is going to help all sectors of the housing market for various reasons. First, it will obviously help the low and middle income buyers by giving them much better mortgage rates. Additionally, the positive press will help the general mode out there (other then a lot of bears on this and Lansner’s blog). This will also trickle into the upper end as sellers of lower end inventory are now able to find sellers and move up. Just wait and see people.
Sure, if you are poor, you need the government to help you buy a $700k house, because otherwise you cannot afford it … oh, wait …
We have had HUD and GSEs for >$417k mortgages throughout and this is exactly the sector which is worst hit. Increasing the limits will have little impact, makes no sense in terms of the mandate to aid the needy, and is just another step in the socialization of risk and privatization of return in our democracy. Why doesn’t anti-trust cover “too big to fail”, huh?
Hello,…. McFly. Just because the limit is $730k doesn’t mean you have to borrow to the limit. It means that you can get a conforming loan over $417k.
Dream on BigD, there are not enough people who qualify at these prices.
It’s all relative to mortgage rates. Today’s rates for conforming at no points is in the 6.5 to 6.75% range, way too high for first time FHA buyers. There will be very little interest in the new FHA loan amount in the OC because people utilizing FHA in the first place are not your top wage earners. Sure, first time or second time or whatever can now get a (i.e.) $650,000 new FHA loan. Who can qualify at 6.5% and above?
You can change the conforming all you want. But to qualify you have to go through a very scrutinizing proceedure that will eliminate most of the people that gamble in the housing bubble. Au revoir dreaming idiots, very few people will benefit from this changes.
who are all these people quoting rates, i am looking at my rates sheets and not one lender is over 6.375% 30 yr frm. is that high, yes it is but still relativly low compared to 6 months ago, the problem with rates are that even though the 10yr treasury is relativly low, the banks are taking the profits and not lowering the rates, a couple of weeks ago we locked a loan at 5.75% 30 yr frm and the 10 yr treasury is the same as it is today with a 6.3755 so it is the banks and other scenarios that are keeping the rates up
Actually, FHA rates are better today than conventional….
San Bernadino County $500,000 max. Great for a lot of SB Co., but what about border areas like Chino Hills? Not a lot of houses for $500k. I wonder if there is any flexibility for border areas, or localized areas within a county?
Mark,
Nope! No flexibility available! The county level is the county level…no “well, it’s CLOSE to Orange County” allowances!
Steve, your rate sheets are a week old or you’re working for .25% of a point as commission. Ck. Wells, PHH, Chase, WAMU, Citi, etc. and you’ll see 6.5%-6.625% for 1 rebate, no pts. to borrower. Name your lenders or you sound just like another bait and switch broker.
Sorry Steve, I’m referring to conventional and your looking at FHA….you’re right.
Like this is going to help anyone. If Someone can’t afford a 20% down payment they can’t afford a home right now. , A 729k loan with 3% down, at 5% (which is doubtful) their payment will be approx. $4280.00 Thats not counting MIP at what…lets say even .5% Thats an additional $300… Add HOA’s and mello roos, and you are looking at a financial disaster waiting to happen.