Last updateWed, 20 Sep 2017 9am

Business & Real Estate

Realtors applaud reinstated federal loan limits

President Barack Obama Nov. 18 signed into law a bill that reinstates the Federal Housing Administration (FHA) loan limit in high-cost areas through December 2013. In Santa Clara County, this means that the maximum size of mortgages FHA can insure is now back to $729,750.

The higher Fannie Mae, Freddie Mac and FHA conforming loan limits of $729,750 expired Sept. 30 and were subsequently reduced to $625,500. The new law pertains only to FHA-backed loans.

The Silicon Valley Association of Realtors and its state and national partner associations have previously advocated for Congress to reinstate higher loan limits permanently. FHA provides mortgage insurance to borrowers without enough of a down payment to qualify for prime loans.

With an FHA loan, homebuyers can put down as little as 3.5 percent on a mortgage loan.

The conforming loan limit determines the maximum size of a mortgage that government-sponsored enterprises Fannie Mae and Freddie Mac can buy or guarantee. Nonconforming or jumbo loans typically carry higher mortgage interest rates than conforming loans, increasing monthly payments.

Fannie Mae, Freddie Mac and FHA currently back 90 percent of new home loans.

The new law also provides for a short-term extension of the National Flood Insurance Program (NFIP) through Dec. 16, which allows home and business owners across the country access to affordable flood insurance.

The Silicon Valley Association of Realtors and its state and national partner associations previously urged Congress to work on a five-year NFIP reauthorization bill to provide certainty and avoid further disruption to real estate markets.

The Silicon Valley Association of Realtors provided information for this article. For more information, email Rose Meily at This email address is being protected from spambots. You need JavaScript enabled to view it. or visit www.silvar.org.

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