New Conforming Loan Rates in the Washington DC Area

The Department of Housing and Urban Development (HUD), today published the new single family loan limits for conforming and FHA loans.  These new, increased loan amounts were mandated by the Economic Stimulus Act, but we were awaiting the actual numbers to be released.  Congress had given HUD 30 days to publish these new loan limits and they managed to get them out over a week early.  The increases are local in nature and are based on the housing costs in various parts of the country.

The good news for what appears to be (on quick glance, I must admit) the entire Washington Metropolitan Area is that the new conforming loan limit and the FHA loan limit will be increased to the maximum amount of $729,750.  This is a HUGE benefit to our area, given that the previous maximum loan amount was only $417,000.  Currently, this increased amount will expire at the end of 2008, but in the months that it will be available, it will definitely help our local economy.

Here’s what the increased loan limits will mean.  It means that borrowers will not have to go to “jumbo” loans if they are borrowing up to $729,750.  Because it has been nearly impossible for banks to sell jumbos over the past few months, these products have been difficult to get and, therefore, extremely expensive.  So, the first good news is that this should stimulate buyers to purchase homes in the mid-$400ks, up to about $800k (if you were to purchase an $800,000 home and put 10% down, you’d have a loan amount of $720,000 – which is now a conforming loan amount). 

This new loan amount, besides helping to stimulate sales of existing homes in Washington DC (and the rest of the Metropolitan area), could also rescue current homeowners who need to refinance.  It is expected that there are people who will avoid going into foreclosure because of these raised loan limits.

Here’s hoping that now that HUD has announced the single family loan limits across the country, they will rapidly develop the necessary guidelines so that lending institutions can make these loans available ASAP! 

- Contributing blogger Gretchen Koitz