When I first came into the business of Real Estate in 1972, most of the loans that secured our home sales were either FHA or VA. In fact, our first house in Sunnyvale was financed with an FHA loan...an Eichler that we bought for $26,000! But times have changed, and home values have grown exponentially. The FHA loans, with a cap of $362,790, were almost never used in Santa Clara County.
Now the U.S. Department of Urban Development has temporarily raised the maximum allowable loan amounts to $729,750 for expensive areas such as ours. Fannie Mae and Freddie Mac limits have also been raised, but the interest rates on those are still a full percentage point higher than those at the old conforming rate of $417,000.
Our in house lender, Princeton Capital, is already ready to handle these low down payment loans, but some mortgage brokers are rushing to learn the FHA guidelines.
Realtors will also have to include a couple of new forms with their offers, but all in all, this is a welcome addition to the local loan situation.
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