I was talking with one of my top Realtor contacts earlier this week, and he had heard rumors that the FHA loan limits in Boulder County would be resetting substantially lower come October 1, 2011. I have seen the conforming (Fannie and Freddie) and FHA loan limits change many times in my 15 years as a senior mortgage loan officer. This year, however, is different. Usually they are going up or staying the same. This year, they may be going down.
What’s behind this?
During the financial crisis of 2009 these loan limits were substantially and temporarily raised to compensate for the fact that jumbo loans (larger mortgage loans not covered by some form of government guarantee) disappeared as traditional sources (banks) shut down these programs. Essentially, if a buyer needed to borrow more than the existing FNMA or FHA mortgage limit, there were limited sources to access the money as a single mortgage loan.
As things currently stand, it looks like the loan limits, if they do actually change on October 1, will go back to the levels that existed in 2009 but this is not a sure thing yet.
Fannie Mae and Freddie Mac loans would return to a maximum of $417,000 for most counties around Denver (they would stay higher in the mountain resort areas). This means that for Boulder County, the limit would fall from $460,000 to $417,000, while most other Denver metro limits would remain unchanged.
FHA loan limits are a bit more complicated. Boulder County would fall from $460,000 to $402,500. Jefferson, Adams, Broomfield, and Denver counties would drop to $368,000. Larimer and Weld counties would return to $271,050.
What does this mean for you?
As funding sources have returned to the jumbo mortgage market, the government is considering a return to its original mandate, which is to ensure funding for small to medium size mortgages. For mortgages over $417,000, there are a lot more options today than there were in the last two years, such as VA jumbo loans.
What’s my take on this?
The situation is very fluid and can change at a moment’s notice. If we see more uncertainty in the housing market, loans that are not guaranteed by the government could disappear again. You can count on me to provide updates on this topic as it becomes available. In the meantime, I am happy to talk with you directly about this – or any other mortgage questions you have. To reach me today, call 720-352-3775 or email me at jlange@pmglending.com.
