By now you’ve surely heard the news: The feds are planning to reduce their presence in the home loan program, by lowering the maximum dollar amounts of loans they will back. This is scheduled for October of 2011, and creating worries that finding an affordable loan will get harder for buyers, thus leading to lowered offers being made to sellers. (Most loans are federally backed — and those that aren’t become so-called “jumbo loans,” offered at higher rates and requiring higher down payments.)
Note that the loan limit varies by area of the United States. So if, for example, you’re reading an article on this topic from a local paper like the Washington Post, but planning to buy a house in Poughkeepsie, the numbers you see mentioned may not apply to you. That’s why you’ll love the handy interactive map and chart provided by The Wall Street Journal in its article, “Sellers Brace for New Mortgage Caps.”
Using this map, I can, for instance, quickly see that here in Alameda County where Nolo is based, the current FHA loan limit is $729,750 (which believe it or not, doesn’t buy you much around here, especially if you’re looking for a good school district); the pending FHA limit is $625,500; and the overall decline will be $104,250. That could completely change the home-buying picture for people who have saved up just enough to put, say, 15% down on a home worth$650,000.