This week, President Bush signed a two-year, $168 billion economic stimulus package that includes revisions to loan limits on conventional/conforming and FHA loans in high cost areas. The new law boosts the GSE conforming limit to as much as $729,750 through the end of this year, and also raises FHA lending limits to the same level for high-cost areas.
Here's what the bill says:
In high cost areas, the conforming loan limit, and the upper limit for FHA loan guarantee programs, will be 125 percent of the median home price for the area, not to exceed $729,750.
In areas that are not high cost markets, the conforming loan limit will remain $417,000. The upper limit for FHA loan guarantee programs in "normal" markets will be raised from $200,160 to $271,050.
The language in the stimulus bill is confusing, and the fact is nobody can tell you exactly what will happen to loan limits in the Inland Empire Counties until HUD publishes the median home price figures that will be used to determine them.
The U.S. Department of Housing and Urban Development now has 30 days to publish a database of house prices that will be essential in determining which markets get access to the new "jumbo conforming" or "expanded FHA" loan products. Once HUD has done that, the areas affected and their new loan limits will be released.
I also saw some information that stated that new risk factors needed to be designed for the new amounts. This means with all the review of the changes that the department has to make before final approval that we may not see any changes for 3 months or more.
The changes allowing buyers to qualify for more loan at lower interest rates will save the consumer money. We will have to wait and see if the Underwriter requirements are changed and actually do not not make it easier to qualify...it could be more difficult an then the changes may not benefit as many consumers as we would have hoped.