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Updated February 4, 2012 : The jumbo and conforming loan limits provided below reflect the 2012 loan limits of each U.S. county. If you get your local jumbo and conforming loan limit information somewhere else, make sure that source is accurate and up-to-date.
A "conforming mortgage" is so named because its loan traits -- quite literally -- "conform" to the loan rules set forth by Fannie Mae or Freddie Mac.
Fannie's and Freddie's mortgage guidelines are dense, covering thousands of home loan traits, but there is one over-reaching rule -- neither Fannie Mae nor Freddie Mac will securitize a mortgage that's considered "too big" for its books.
Defining "too big" is an annual decision-making process based on the economy and home price data. The debate results in a "loan size limit"; the maximum amount of mortgage that Fannie and Freddie will allow, per their respective home loan guidelines.
Loans at, or below, these limits can be conforming mortgages. Loans for more than the conforming loan limit are often considered "jumbo".
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2012 conforming loan limits are the same as in from 2011, 2010, 2009, 2008, 2007 and 2006.
Home prices are lower today as compared to 6 years ago, but maximum loan sizes are not; and this makes more homes eligible for Fannie Mae/Freddie Mac financing. For home buyers, this is a good thing because Fannie Mae- and Freddie Mac-backed loans are often the "cheapest" form of financing in terms of monthly mortgage payment.
Loan limits staying steady is good for existing homeowners, too, because, should conforming loan limits ever fall, scores of households would be immediately "loan-sized out" from the refinance market.
This includes HARP mortgage applicants who, in theory, have the most to gain from elevated conforming mortgage loan limits. Read the complete HARP guidelines here.
The 2012 conforming loan limits vary by property-type. With more "units" per property, conforming loan limits rise. The classification "1-unit home" includes single-family residences of all types -- detached homes, row homes, townhomes, condos and co-ops.
Note that these limits are for conforming mortgages only. FHA loan limits -- including for the FHA Streamline Refinance -- use different scale. The same is true for VA IRRRL loans and USDA mortgages.
The 2012 conforming mortgage loan limit, as established by Fannie Mae and Freddie Mac, comes with exceptions. Specifically, for high-cost areas nationwide.
A "high-cost" area is exactly what it sounds like -- a city, town or county in which the homes are "expensive" as compared to everywhere else.
A few high-cost examples include Loudoun County and the rest of Washington, D.C. Metro area (e.g.; Potomac, MD; Bethesda, MD; Alexandria, VA), most of California, and Eagle County, Colorado.
By contrast, and despite home prices rivaling those of San Francisco, Malibu and New York City, the high-cost designation does not include the city of Chicago nor any of its surrounding cities (e.g.; Highland Park, Winnetka, Hinsdale) .
This is because the Chicagoland statistical region is massive, reaching south to the Indiana border; north to the Wisconsin border; and west to Naperville.
Chicago's loan limit is $417,000. Everything in excess of that is jumbo.
Whether you're buying a home or refinancing one, mortgage loan limits for your area influence the mortgage rate you get for your home.
Fixed-rate mortgages within the local conforming loan size limits will almost always get a better rate versus comparable jumbo fixed-rate mortgages. Conforming loans tend to require fewer loan fees, too.
To see your local conforming loan limit, click here to use an online lookup table. You'll see your local conforming loan limit for 1-unit, 2-unit, 3-unit and 4-unit properties. FHA loan limits are on the chart, too.
Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator call 513-443-2020.
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