Conventional Jumbo

The new bill sets the Conforming limits set by FNMA/FHLMC to the lesser of $729,750 or 125% of an area’s median home sales price. If 125% of an area’s median home sales price is below the current Conforming loan limit of $417,000, then the old Conforming limit of $417,000 still applies. The area median home price AMHP is determined by HUD and is based on the National Association of Realtors NAR data for each MSA.

The Conforming limit changes are temporary, and are set to expire on 12/31/2008. This date may also be extended. The new Conforming Jumbo limits will apply to 30 year fixed rate mortgage & 15 year fixed rate, fully amortizing mortgages, and owner occupied properties. FNMA will have other credit criteria including loan to value limitations.

Since the new Conventional Jumbo limits are restricted to 125% of an area’s median home price, it’s estimated that only twenty of the larger MSAs across the country will see an increase in conforming loan limits and only six will see the limit go to $729,750. Of the six counties, five are in California, and one is in Hawaii. However, two MSAs within our footprint should see limited benefit:Washington DC & Miami-Fort Lauderdale-West Palm Beach FL. However, the DC area loan limit will only go to approximately $550K while the benefit in FL should be at approximately $433K. Conventional Jumbo mortgage rates are between normal conforming loans & regular jumbo loans.