There has been some confusion recently about what will happen with the temporary conforming loan limit of $729,750 expires at the end of this year. Most of us have been assuming that the new limit will be the new cap of $625,000.
However, the formula that OFHEO uses is 125% of the MSAs median home price, not to exceed the cap.
The latest DataQuick report shows the Bay Area’s median home price is now $400,000. Does that mean that they new conforming loan and FHA limit will be $500,000 in January?
Looking on the OFHEO website, I found this language:
Fannie Mae and Freddie Mac conforming loan limits for the high cost areas below may rise on a temporary basis to the corresponding levels listed. These temporary jumbo conforming loan limits apply to loans originated from July 1, 2007 to December 31, 2008. For a one-unit property, the maximum temporary loan limit is calculated as 1.25 times the median house price for the highest priced county in the property's metropolitan or micropolitan area or the median house price for the property's county if it is in a rural county.
San Francisco County currently has a median price of $675,000…so we should be ok.
For now.
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