Home mortgage loan limits are announced for the upcoming year each November.
This year they increased for the first time in many years.
Keep reading for details on what you need to know about loans and limits for 2020 in San Diego County.
When you are looking for your own home, you may need a loan to be able to afford it.
There are a few different types of loans that you will have to know about, in order to make an informed decision.
Here’s a look at some of the loan types that you should be aware of.
These can help you know what type you are eligible for and what type you’ll need, depending on how much your house costs and the neighborhood you plan to live in.
Here's a quick rundown of our list:
- Super Conforming
- What are Freddie Mac and Fannie Mae?
- Why 2020 Limits are Higher
- What’s better?
- The Takeaway
FHA loans are offered by the Federal Housing Administration, and are managed by HUD, or the Department of Housing and Urban Development.
Many people are eligible for this type of loan, although there are certain specifications as well.
For example, they offer low down payments, but you also must have mortgage insurance.
Since these are backed by the government, the lender is protected from losses.
Make sure you read these additional FHA mortgage articles:
- San Diego No Money Down FHA mortgage loan
- San Diego FHA Streamline Refinance mortgage loan
- San Diego FHA 203(k) construction mortgage loan
VA loans, or loans that are offered by the Department of Veterans Affairs, are as you would guess, only eligible to military servicemen and their families.
They are guaranteed by the government, meaning that the lender will be paid back by the VA if losses occur.
This type is quite beneficial to people that are eligible for it, since it usually doesn’t require a down payment on the borrower’s part.
Make sure you read these additional VA mortgage articles:
USDA, or loans offered by the United States Department of Agriculture are specifically for people in rural areas.
They are also subject to income limits.
In other words, people in rural areas with low incomes are most likely to qualify for these loans, especially if they are unable to qualify for other types of loans.
Make sure you read these additional USDA mortgage articles:
This type of loan meets certain guidelines laid out by Fannie May and Freddie Mac.
These two companies are responsible for most of the mortgages throughout the country and are operated by the government.
In other words, it conforms to certain stipulations and limits, which is where the name comes from.
A conforming loan is defined as $510,400 or less.
Make sure you read these additional conforming mortgage articles:
- San Diego No Money Down conforming mortgage loan
- San Diego 1% Down conforming mortgage loan
- San Diego conforming construction mortgage loan
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This type of loan refers to mortgages in areas that are costly to live in.
In other words, these loans help you buy a house in some of the most expensive neighborhoods there are.
In San Diego, a super conforming loan lies between $510,400 to $701,500.
Make sure you read these additional super conforming mortgage articles:
As you may have guessed, a jumbo loan gets its name because it is larger than conforming loans in terms of amount.
This also means they are higher than the limits imposed by Freddie Mac and Fannie May.
This leads to greater risk when it comes to the lender, so a borrower must meet special guidelines in order to qualify.
They must have a great credit rating and be able to put down a large down payment.
Additionally, these loans come with higher interest rates.
A jumbo loan occurs if a loan is over $701,500.
Make sure you read these additional jumbo mortgage articles:
What are Freddie Mac and Fannie Mae?
These two corporations are essentially the reason why there is enough money for lenders to offer mortgage loans.
When a lender offers a mortgage to someone, one of these corporations purchases the loans off of them.
This gives the lender money to offer new loans with, so more people are able to buy homes.
Conforming loans are the type that is most often purchased by Freddie Mac and Fannie Mae, since they are considered to be lower risk than other types.
After the mortgages are purchased from the lenders, they are liquidated into special securities that other corporations or individuals can invest in.
This allows even small banks to offer mortgages, and ensures that there is money to make the process run smoothly, even if a borrower ends up not being able to pay off their mortgage.
Here’s a look at the loan limits in San Diego.
Conforming, FHA, and VA Limits
- 1 Family Unit: $701,500
- 2 Family Units: $898,050 (Duplex)
- 3 Family Units: $1,085,550 (Threeplex)
- 4 Family Units: $1,349,050 (Fourplex)
Why 2020 Limits are Higher
The loan limits have increased for the first time in over 10 years because of the rising prices on homes in the San Diego area.
The same trend has been seen in many other parts of the country as well, so rates had to be adjusted in other cities and states too.
In some areas of San Diego, prices of homes have risen over 10 percent from one year to the next, so loan limits needed to be adjusted in order to address these changes.
A conforming loan is your best bet when it comes to mortgages.
They have lower interest rates and are generally easier to get.
Of course, everyone won’t be able to purchase their dream house with a conforming or super conforming loan, so you’ll need to be aware of all your options.
With all the different mortgage loan options is always a great idea to deal with a talented local mortgage insider to point you in the right direction.
At San Diego Real Estate Hunter we specialize in matching borrowers with the best mortgage options available - to save you time, money, a hassle.
Well, when should we get started?
Leave your comments below - or call or text me at (760) 297-4539
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