At Home in Upland

FHA Conforming Loan Limits Brought Back to Sanity for San Bernardino County, CA.

by Brad Rachielles

For several years, Congress has recognized the need to have FHA Conforming loan Limits reflect the needs of the home buyers in areas where the median home prices were significantly higher than the norm for most areas of the country. Los Angeles, San Bernardino, Orange and Riverside Counties in California were several counties needing consideration among others, and were clearly not helped much if buyers needed loan guarantees for $355,350 to $500,000 properties if loans could only be guaranteed to $355,350 or lower. The solution was to tie the loan limits to a percentage above the median price. It worked well, but the elevation of the limits had an expiration date.

On October 1, 2011, the extension expired and those limits dropped to $355,350 for San Bernardino and Riverside Counties, and to $625,500 for Los angeles and Orange Counties. REALTORS all over recognized the difficulty of buying under these conditions and lobbied for a return to the pre-October higher limits.

Late last week, our lawmakers with a 71% approval vote in the House and a 70% approval in the Senate, did restore the FHA conforming loan limits, but declined to include Fannie Mae or Freddie Mac in the restored limit legislation. So, being thankful for what we did get, the new FHA conforming loan limits are:

• San Bernardino % Riverside Counties = $500,000
• Los Angeles and Orange Counties = $729,750.

Noteworthy for my market area:

• In September of this year 34.6% of all closings were financed with FHA loan guarantees.
• 15.4% of those were for sales between $355,350 and $500,000
• In October, the month when the reduced limits too effect,  only 7.3% of the closings between $355,350 and $500,000 were FHA backed.... a 55% fall off. Presumably, those that did go FHA in that range might have brought the difference to the table in cash, meaning a higher down payment.

The bottom line is that this is very good news for those of us where home prices have typically been higher. Buyers families needing  larger properties have access to loans with lower down payments, and sellers of properties have a larger buyer pool available, and that's because FHA Conforming Loan Limits have been Brought Back to Sanity for San Bernardino County, CA.... at least through 2013.

Photo Credit: CC as of 11/21/11 by nikcname