Part of the The American Recovery and Reinvestment Act of 2009 includes bringing back the higher 2008 loan limits to certain areas. Locally this means we may see high balance loan limits increase from $506,000 for single family dwellings in King, Snohomish and Pierce counties back to $567,500. Fannie Mae, Freddie Mac and FHA will move forward and lenders will immediately follow.
At 80% down payment, this represents a $709,375 purchase price. Using 5% interest rate, 1% prop taxes and 28% DTI, the potential homeowner is earning at least $158k.
Keep us posted Rhonda! A lot of the builders are offering reduced rates (buydowns) on the $506,000 amount. If that amount remains as one of the price tiers, we won’t have to adjust much. But if the $506,000 amount disappears altogether, it could get a little hairy on escrows currently in place.
Thanks for keeping us ahead of the curve on what may happen next!
I’m curious if what we’re talking about is the revised conforming rates from 2008 in high-cost counties? I can’t remember what they called these (Agency Jumbos?) but is the thought that the gov. is going to reinstate these levels and allow lenders to offer conforming loan rates (currently around 4.875 for a pt./1.5 pts) for higher loans? Boulder County, CO had its conforming level raised to $460K. That loan right now would be offered at around 7.5%. I would be very excited to think, soon, I could refi my loan from last Sept. of around $450K at 6.5% down to 4.875% without buying the loan down to $417k. Am I getting the proposed details of this right? If so, is there a time line for when these rates at these new, higher loan levels will be available?
RM, we should have the nitty gritty soon for specific areas. When the 2009 reduced “agency jumbo” limits came out, some counties in Washington State that qualified for loans between $417,001 to Jumbo no longer did. Anything over $417k right now is “jumbo” (non-conforming).
Friday, when I did my rate post, the new limits were not available. I will post at RCG when they are.
RM, we should have the nitty gritty soon for specific areas. When the 2009 reduced “agency jumbo” limits came out, some counties in Washington State that qualified for loans between $417,001 to Jumbo no longer did. Anything over $417k right now is “jumbo” (non-conforming).
Friday, when I did my rate post, the new limits were not available. I will post at RCG when they are.
Sorry to be a knucklehead, but I’m not following the “agency jumbo” explanation. I thought Seattle/King Co. was considered one of the more expensive places in the country and we now had access to something called a “conforming jumbo” up to $517,000 (or thereabouts?). I’m trying to refi my owner-occupied triplex plus get cash out which would total about $475,000 (property value is low now and only worth between $550,000-$615,000), so wouldn’t this amount still qualify for the under 5% rates out there? I have excellent credit (778,779,782) but currently only have worker’s comp disability income ($1,000/month) plus the rental income ($2800/month) so I don’t know if any of this disqualifies me numbers-wise. Thanks for any guidance!
Lisa, your comment has a lot of points to address. Right now, the single family “high balance” (same thing as conforming jumbo) limit is $506,000. It should be returning to the 2008 limit of $567,500 for single family.
For a tri-plex, currently the limit is $783,000 for “high balance” and may roll up to the 2009 limit.
A triplex is going to have a different rate than a single family (1-unit) property. And a cash-out refinance has a higher rate than a rate-term (no cash out) refi or purchase mortgage. The combo of your property type (3-plex) and transaction type (cash-out) may prove to be difficult…especially since you’re over the conventional loan amount of $417k.
And your estimated loan to value is hurting you as well…
Typically we use 70% of the actual rents as income and worker’s comp may or may not be counted towards income depending on how long you are guaranteed to continue receiving it.
Sorry–your scenario is a tough one! Even if you did qualify for a refi–5% would be well out of range due to all the “hits” to pricing. Plus, being over $417k throws more into the mix.
Lisa, your comment has a lot of points to address. Right now, the single family “high balance” (same thing as conforming jumbo) limit is $506,000. It should be returning to the 2008 limit of $567,500 for single family.
For a tri-plex, currently the limit is $783,000 for “high balance” and may roll up to the 2009 limit.
A triplex is going to have a different rate than a single family (1-unit) property. And a cash-out refinance has a higher rate than a rate-term (no cash out) refi or purchase mortgage. The combo of your property type (3-plex) and transaction type (cash-out) may prove to be difficult…especially since you’re over the conventional loan amount of $417k.
And your estimated loan to value is hurting you as well…
Typically we use 70% of the actual rents as income and worker’s comp may or may not be counted towards income depending on how long you are guaranteed to continue receiving it.
Sorry–your scenario is a tough one! Even if you did qualify for a refi–5% would be well out of range due to all the “hits” to pricing. Plus, being over $417k throws more into the mix.
I don’t think you’d qualify on DTI (debt to income) ratios.
70% of the rental income is $1960, plus the $1,000 disability income (if allowable) still is only $2960.
At 5% on a 30 yr fixed loan of $475K, the payment is $2,550, plus tax and insurance. Anything over 50% DTI is unlikely to get approval; standard guidelines are at 42% DTI.
I really enjoy this site, I think it’s a great way to bounce ideas and share with the people in/outside the industry.
I have a quick question – I’ve seen several mentions here in regards to the loan limits increasing again from 506 to 567 “soon” but where are you getting the info? If the limits for 09 are based on 115% of the median home values, with prices in our area on the decline, what would warrant an increase back to last year’s levels? July 07’s factor was higher at 125%, combined with higher values at that time yielded the higher loan limit of 567. Lower values and a lower factor for 09, not sure how an increase would be justified.
Please prove me crazy ’cause obviously I’d love to see it higher.
I really enjoy this site, I think it’s a great way to bounce ideas and share with the people in/outside the industry.
I have a quick question – I’ve seen several mentions here in regards to the loan limits increasing again from 506 to 567 “soon” but where are you getting the info? If the limits for 09 are based on 115% of the median home values, with prices in our area on the decline, what would warrant an increase back to last year’s levels? July 07’s factor was higher at 125%, combined with higher values at that time yielded the higher loan limit of 567. Lower values and a lower factor for 09, not sure how an increase would be justified.
Please prove me crazy ’cause obviously I’d love to see it higher.
So basically it has nothing to do with anything remotely close to factors or housing prices. Some politician somewhere either got elected on the premise or wants to get elected on the promise.
So looks like we’re up for conventional increases, now just have to wait for FHA to fall in line.
Exactly–this has nothing to do with how loan limits have been factored in the past…which is why they went down in 2009 from 2008 (declining home values). With that said, I’m glad to see the loan limits return to the higher amounts as there are a lot of folks with non-conforming or who were left in the gap between the 2008 and 2009 loan limits.
I think this will help many home owners and it allows $61,500 more in financing for King, Snohomish and Pierce Counties with agency jumbo (aka high balance and/or jumbo conforming).
I’ve been checking the FHA site all day for updates…none yet.
Exactly–this has nothing to do with how loan limits have been factored in the past…which is why they went down in 2009 from 2008 (declining home values). With that said, I’m glad to see the loan limits return to the higher amounts as there are a lot of folks with non-conforming or who were left in the gap between the 2008 and 2009 loan limits.
I think this will help many home owners and it allows $61,500 more in financing for King, Snohomish and Pierce Counties with agency jumbo (aka high balance and/or jumbo conforming).
I’ve been checking the FHA site all day for updates…none yet.
Hi Rhonda and Roger,
I’ve been offline for a few days but wanted to thank you both for the information and advice. I’ll keep reading and maybe something else will show itself as a possibility (or even a partial possibility!). Thanks again!
Let’s see … click, click, click …
At 80% down payment, this represents a $709,375 purchase price. Using 5% interest rate, 1% prop taxes and 28% DTI, the potential homeowner is earning at least $158k.
tomtom, 80% down payment? Do you mean 20% down payment?
It will be interesting to see how Fannie/Freddie treat the increased loan amounts…if they’ll add another price tier. We’ll have to wait and see.
Oops, yes. 20% down payment.
tomtom, and FHA is at 3.5% down. I’m quoting $518k w/3.5% down right now for a potential home buyer.
Keep us posted Rhonda! A lot of the builders are offering reduced rates (buydowns) on the $506,000 amount. If that amount remains as one of the price tiers, we won’t have to adjust much. But if the $506,000 amount disappears altogether, it could get a little hairy on escrows currently in place.
Thanks for keeping us ahead of the curve on what may happen next!
I think we should all get medals for juggling and dancing and learning so much when this market is said and done.
It keeps us young 🙂
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I’m curious if what we’re talking about is the revised conforming rates from 2008 in high-cost counties? I can’t remember what they called these (Agency Jumbos?) but is the thought that the gov. is going to reinstate these levels and allow lenders to offer conforming loan rates (currently around 4.875 for a pt./1.5 pts) for higher loans? Boulder County, CO had its conforming level raised to $460K. That loan right now would be offered at around 7.5%. I would be very excited to think, soon, I could refi my loan from last Sept. of around $450K at 6.5% down to 4.875% without buying the loan down to $417k. Am I getting the proposed details of this right? If so, is there a time line for when these rates at these new, higher loan levels will be available?
RM, we should have the nitty gritty soon for specific areas. When the 2009 reduced “agency jumbo” limits came out, some counties in Washington State that qualified for loans between $417,001 to Jumbo no longer did. Anything over $417k right now is “jumbo” (non-conforming).
Friday, when I did my rate post, the new limits were not available. I will post at RCG when they are.
RM, we should have the nitty gritty soon for specific areas. When the 2009 reduced “agency jumbo” limits came out, some counties in Washington State that qualified for loans between $417,001 to Jumbo no longer did. Anything over $417k right now is “jumbo” (non-conforming).
Friday, when I did my rate post, the new limits were not available. I will post at RCG when they are.
Sorry to be a knucklehead, but I’m not following the “agency jumbo” explanation. I thought Seattle/King Co. was considered one of the more expensive places in the country and we now had access to something called a “conforming jumbo” up to $517,000 (or thereabouts?). I’m trying to refi my owner-occupied triplex plus get cash out which would total about $475,000 (property value is low now and only worth between $550,000-$615,000), so wouldn’t this amount still qualify for the under 5% rates out there? I have excellent credit (778,779,782) but currently only have worker’s comp disability income ($1,000/month) plus the rental income ($2800/month) so I don’t know if any of this disqualifies me numbers-wise. Thanks for any guidance!
Lisa, your comment has a lot of points to address. Right now, the single family “high balance” (same thing as conforming jumbo) limit is $506,000. It should be returning to the 2008 limit of $567,500 for single family.
For a tri-plex, currently the limit is $783,000 for “high balance” and may roll up to the 2009 limit.
A triplex is going to have a different rate than a single family (1-unit) property. And a cash-out refinance has a higher rate than a rate-term (no cash out) refi or purchase mortgage. The combo of your property type (3-plex) and transaction type (cash-out) may prove to be difficult…especially since you’re over the conventional loan amount of $417k.
And your estimated loan to value is hurting you as well…
Typically we use 70% of the actual rents as income and worker’s comp may or may not be counted towards income depending on how long you are guaranteed to continue receiving it.
Sorry–your scenario is a tough one! Even if you did qualify for a refi–5% would be well out of range due to all the “hits” to pricing. Plus, being over $417k throws more into the mix.
Lisa, your comment has a lot of points to address. Right now, the single family “high balance” (same thing as conforming jumbo) limit is $506,000. It should be returning to the 2008 limit of $567,500 for single family.
For a tri-plex, currently the limit is $783,000 for “high balance” and may roll up to the 2009 limit.
A triplex is going to have a different rate than a single family (1-unit) property. And a cash-out refinance has a higher rate than a rate-term (no cash out) refi or purchase mortgage. The combo of your property type (3-plex) and transaction type (cash-out) may prove to be difficult…especially since you’re over the conventional loan amount of $417k.
And your estimated loan to value is hurting you as well…
Typically we use 70% of the actual rents as income and worker’s comp may or may not be counted towards income depending on how long you are guaranteed to continue receiving it.
Sorry–your scenario is a tough one! Even if you did qualify for a refi–5% would be well out of range due to all the “hits” to pricing. Plus, being over $417k throws more into the mix.
Lisa:
I don’t think you’d qualify on DTI (debt to income) ratios.
70% of the rental income is $1960, plus the $1,000 disability income (if allowable) still is only $2960.
At 5% on a 30 yr fixed loan of $475K, the payment is $2,550, plus tax and insurance. Anything over 50% DTI is unlikely to get approval; standard guidelines are at 42% DTI.
Hi Rhonda.
I really enjoy this site, I think it’s a great way to bounce ideas and share with the people in/outside the industry.
I have a quick question – I’ve seen several mentions here in regards to the loan limits increasing again from 506 to 567 “soon” but where are you getting the info? If the limits for 09 are based on 115% of the median home values, with prices in our area on the decline, what would warrant an increase back to last year’s levels? July 07’s factor was higher at 125%, combined with higher values at that time yielded the higher loan limit of 567. Lower values and a lower factor for 09, not sure how an increase would be justified.
Please prove me crazy ’cause obviously I’d love to see it higher.
Thank you.
Hi Rhonda.
I really enjoy this site, I think it’s a great way to bounce ideas and share with the people in/outside the industry.
I have a quick question – I’ve seen several mentions here in regards to the loan limits increasing again from 506 to 567 “soon” but where are you getting the info? If the limits for 09 are based on 115% of the median home values, with prices in our area on the decline, what would warrant an increase back to last year’s levels? July 07’s factor was higher at 125%, combined with higher values at that time yielded the higher loan limit of 567. Lower values and a lower factor for 09, not sure how an increase would be justified.
Please prove me crazy ’cause obviously I’d love to see it higher.
Thank you.
John, FHFA confirmed the loan limits today: http://budurl.com/2009conf which I posted here at Rain City Guide.
I’m waiting for lenders to adopt the new loan limits anytime–especially since this appears to be retroactive to the beginning of this year.
Thanks Rhonda!
So basically it has nothing to do with anything remotely close to factors or housing prices. Some politician somewhere either got elected on the premise or wants to get elected on the promise.
So looks like we’re up for conventional increases, now just have to wait for FHA to fall in line.
Thanks again.
John Mill Creek,
Exactly–this has nothing to do with how loan limits have been factored in the past…which is why they went down in 2009 from 2008 (declining home values). With that said, I’m glad to see the loan limits return to the higher amounts as there are a lot of folks with non-conforming or who were left in the gap between the 2008 and 2009 loan limits.
I think this will help many home owners and it allows $61,500 more in financing for King, Snohomish and Pierce Counties with agency jumbo (aka high balance and/or jumbo conforming).
I’ve been checking the FHA site all day for updates…none yet.
John Mill Creek,
Exactly–this has nothing to do with how loan limits have been factored in the past…which is why they went down in 2009 from 2008 (declining home values). With that said, I’m glad to see the loan limits return to the higher amounts as there are a lot of folks with non-conforming or who were left in the gap between the 2008 and 2009 loan limits.
I think this will help many home owners and it allows $61,500 more in financing for King, Snohomish and Pierce Counties with agency jumbo (aka high balance and/or jumbo conforming).
I’ve been checking the FHA site all day for updates…none yet.
Hi Rhonda and Roger,
I’ve been offline for a few days but wanted to thank you both for the information and advice. I’ll keep reading and maybe something else will show itself as a possibility (or even a partial possibility!). Thanks again!
Hi Lisa, I hope everything works out for you! Thanks for stopping by Rain City Guide.