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Maximum Conforming Mortgage Amount in California Going up in 2019

In November, the Federal Housing Finance Agency (FHFA) announced that it was increasing conforming loan limits for most counties across the country. In 2019, California loan limits will range from $484,350 to $726,525, depending on the county. FHA and VA might go up as well.

California Loan Limits Go Up for 2019

In California, the 2019 conforming loan limit for most counties will go up to $484,350 in 2019. In higher-priced real estate markets like San Francisco and Orange County, the 2019 loan limit will be $726,525. These caps apply to single-family homes in particular. There are higher limits for multi-family properties such as duplexes.

View limits for all California counties

The new baseline for 2019 will be $484,350. That’s the limit for most counties across the country. In high-cost areas, the new “ceiling loan limit” for one-unit properties will be $726,525 (or 150 percent of the $484,350 baseline amount).

Terminology: In California, a “conforming” loan is one that meets the size requirements (and other criteria) used by Fannie Mae and Freddie Mac. These are the two government-sponsored corporation that buy loans from lenders. When a mortgage loan exceeds these county-specific limits, it’s referred to as a “jumbo” loan.

Borrowers with sufficient income can often qualify for a California jumbo loan, which offers financing above the limits mentioned above. Please contact us if you have questions about your borrowing capacity.

FHA & VA Loan Programs Might Follow Suit

FHA home loans (those that are insured by the Federal Housing Administration) have loan limits as well. And like the conforming caps mentioned above, they also vary by county.

There’s a chance that the limits for FHA loans in California will go up in 2019. In the past, whenever the government has increased the limits for conforming loans, the FHA program has generally followed suit.

We will publish  another update if and when the Federal Housing Administration makes such an announcement. That usually happens sometime in December.

Additionally, the Department of Veterans Affairs (which manages the VA loan program for military folks) could soon announce that it will be increasing loan limits for 2019. During 2018, they aligned their limits with those set by the FHFA for conforming mortgages. They’ll probably do the same thing in 2019 as well. We are keeping an eye out for that announcement.

The Result of Rising Home Prices

Home prices in most California cities have risen over the past year — and significantly, in some areas. The FHFA’s decision to increase conforming loan limits for 2019 is a direct result of this price growth.

According to the agency’s November announcement:

“As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.”

The median home value in California rose by around 6% over the past year, as of November 2018. And experts are predicting that prices will continue to climb throughout 2019.

In many counties across the state, home buyers have plenty of properties to choose from within the conforming loan limits. But in other higher-priced real estate markets, borrowers often have to use jumbo mortgage products to finance their purchases.

For example, the median home price in Walnut Creek (where we are located) rose above $870,000 dollars as of fall 2018. The conforming loan limit for that area will be $726,525 in 2019. That’s significantly less than the median home value. So in this and other pricey housing markets, we could see a higher percentage of borrowers relying on jumbo loans in 2019.

Mortgage questions? Do you plan to buy or refinance a home in California? We can help you choose the right type of mortgage product for your particular situation. Please contact us with your financing questions, or to receive a loan quote.

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