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New year brings higher Fannie, Freddie lending limits

New year brings higher Fannie, Freddie lending limits

By Ron Trujillo /

California home-shoppers will get a late holiday gift in January — a $29,000 boost in the federal lending limit.

The Federal Housing Finance Agency will increase the conforming lending loan limits for mortgages acquired by Fannie Mae and Freddie Mac from the current $424,100 to $453,100 on Jan. 1. High-cost areas — think the Bay Area — will have a new conforming loan limit of $679,650, compared to the current $636,150 loan limit.

Eleven of the state’s 58 counties will have the maximum conforming limit. Eight counties boasted median-home prices in October that exceeded the soon-to-be new conforming limit, according to the California Association of Realtors. Thirty-two counties in the state had median-home prices below the new minimum $453,100 conforming loan limit.

Many California counties have conforming loan limits above the $453,100, but not as high as the new maximum of $679,650.

“CAR applauds the FHFA for recognizing California’s continuing home price increases over the last few years and raising maximum conforming loan limits,” says CAR president Steve White. “Increasing the existing Fannie Mae and Freddie Mac conforming loan limits will provide stability and certainty to the housing market and give tens of thousands of California homebuyers a chance at homeownership.”

The conforming loan limit is critical for a healthy housing market, and determines the maximum size of a mortgage that government-sponsored enterprises Fannie Mae and Freddie Mac can buy or “guarantee.” Non-conforming or so-called “jumbo loans” often have tighter underwriting standards and higher mortgage rates, increasing monthly payments and making homes less affordable for families.

What are the average closing costs in CA?

Closing costs are a big financial challenge for many first-time homebuyers, adding thousands of dollars to the transaction.

California’s average closing costs are $6,288, the seventh most expensive in the nation.  The Golden State’s closing costs are about half of Washington, D.C., the most expensive in the nation at $12,573.

Although expensive, California’s average closing costs are only about 1.2% of the purchase price, much less than other states. For example, Delaware has the third-highest closing costs at $8,663 – or almost 3.4% of the purchase price.

Closing costs include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges.

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