There was great news this week for Orange County, CA home owners and home buyers as Congress agreed to extend the “high” loan limits for another year. On October 29, Congress announced the limits would remain in place through the end of 2010.
Only 2 years ago the maximum Conforming loan limit for Orange County was $417,000. The FHA loan limit for Orange County was only $362,790. At the time, there were plenty of alternative financing options, including Jumbo loan programs, portfolio programs, ALT-A, and of course, Sub Prime. But when the secondary market for mortgages crashed, those programs went away. Congress stepped up and increased the loan limits in 2008, first to $625,500, and then to $729,750, which helped to bring liquidity to the real estate market.
What Does This Mean for Orange County FHA Borrowers?
The $729,750 FHA limit for Orange County has been a huge boost for home buyers with small down payments. FHA only requires a 3.5% down payment. For example, if a home buyer purchases a home for $750,000, they will only need $26,250 down payment. And the down payment for an FHA loan can come from several different sources, including gift or 401K. The FHA program is “full doc”, meaning the borrower should be prepared to prove their income for the past 2 years, and document their source of funds for the down payment. But still, that small down payment has created options for home buyers that wouldn’t be there otherwise.
The first thing home buyers should do before looking at homes is find out how much of a loan they qualify for. Getting PreApproved for a mortgage is very important, since most sellers will not even accept an offer from a buyer who has not first talked to a lender. The process of getting PreApproved will also prepare the home buyer what will be needed once they open escrow on a home. It essentially gives them a “dry run” on actually getting a mortgage to buy a home.
The loan limit for 100% financing for a VA loan in Orange County has been $737,500 in 2009. So far there has not been an announcement on whether that will continue into 2010.
2010 could be a big year, as the real estate recovery continues, boosted by the high loan limits.
Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan. 877-786-4243 x 7.
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*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829
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