What is a Conforming High Balance Loan?
(Sounds Like an Oxymoron)
A conforming loan is one that is sold to one of the Government Mortgage agencies FHLMC or FNMA (Freddie Mac & Fannie Mae). Each year the agencies set the loan limits in response to changes in housing affordability nationwide. The current conforming limit is $417,000. For 2011 the conforming limit is going to stay the same.
Conforming High Balance loans were introduced as a temporary fix by the government mortgage agencies in response to the illiquidity of the Jumbo loan market which basically vanished during the financial crisis. Under this temporary program, Freddie and Fannie buy loans up to a limit of $729,750 based on the housing costs by county. This is the limit for the down state NY market where housing costs are higher then the national average.
Conforming High Balance loans provide attractive pricing to the home buyer for a loan above the conforming limit of $417,000, typically only 1/8% above the conforming pricing.
For 2011 the Conforming High Balance Program will continue through at least September 2011 at the same loan limits as of today
FHA, the Federal Housing Agency, is currently also offering high balance loans allowing a borrower in high cost markets to obtain a mortgage up to $729,750 with as little as a 3.5% down payment and very attractive pricing.
The FHA has not yet announced whether they will continue the program for 2011 and if they do, we do not know whether they will keep the loan limits the same.
The VA (Veterans Administration) that provides attractive loan programs for Veteran’s also provides a high balance loan program with loan limits in 2010 in high cost areas up to a guaranty maximum of $681,250.
The VA has also not announced whether they will continue the program in 2011 and if so what the loan limits will be.
Stay tuned for the updates and rest assured that attractive financing options are available for loans above the conforming loan limits!!
Posted by John Naclerio- 11/29/2010