As you know, the high balance loan limits in San Diego county will be lowered from $697,500 to $546,250 effective 10/1/11. What does this mean for borrowers in San Diego?
In La Jolla, the median home price is $964,134 (http://www.homeinsight.com/). If one were to purchase this home prior to 10/1/11 (good luck with that!), a 28% down payment would allow this loan to conform to the high balance loan limit. At $266,634 down payment is certainly high, but at 28% is not out of the realm of the normal deposit on a home purchase.
After 10/1/11, this lucky home buyer would likely be forced to acquire a Jumbo loan, unless they were able to come up with a $418,000 down payment. This median-home-price purchase would require a 43% down payment to qualify as a high balance conforming transaction.
Jumbo loans are not fully back by Fannie Mae and Freddie Mac and carry a higher 'risk' which translated to a mortgage rate increase of about 1%. In addition, Jumbo loans have more stringent guidelines.
Of course, if your loan falls in to the Jumbo loan category, we would be happy to originate it for you.
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