The new conforming loan guidelines are official, and high-cost areas like San Diego will get a kicker. Now loans originated in 2009 for San Diego County homes will be subject to a higher, $697,500 limit.
This is good news, but keep in mind that we are likely still looking at a three-tiered system. Vanilla conforming loans are still subject to the $417,000 ceiling. Tier two, those conforming loans above $417,000 and up to $697,500, will have a little different (more expensive) flavor. Any loan exceeding the new, higher limits will fall in jumbo land and be subject to different underwriting guidelines (and rates) yet.
We are hoping this breathes some new air into the higher-priced market, one we have seen seriously stalled over the past several months. Now, buyers of homes priced in the mid-$800,000s with 20% down can avoid the death grip of the jumbo loan.
As for higher priced properties, more money down will solve the problem, but that is usually a problem in itself. So, for the most part, we will have to wait for the move-up buyers to return to the market in earnest before we see recovery in this segment, and that will only happen when the overstocked clearance aisles of short-sale and foreclosure properties have been cleared.
Compliments of Dan Green, here is the list of high-cost areas and the associated conforming loan limits for 2009. If you aren’t on the list, $417,000 is your magic number.
ABOUT THE AUTHOR Kris Berg is Co-Owner and Designated Broker of San Diego Castles Realty. If not-so static web sites are your thing, go here at once where you will find loads of real estate information including homes for sale, market trends, floor plans and more. Kris's hobbies include fencing and spot welding. She likes kittens. 
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{ 2 comments… read them below or add one }
Do you think this is too little too late since most home prices have dipped below these levels already? IMO I think this would have been a big help about one and half years ago.
About 2 weeks ago my mortgage banker gave me a jumbo 30 year fixed with 25% down, 0 points, up to $4,ooo,oo0 at 6.5%. We haven’t seen jumbo loans like that for over 6 months or more.
I hope this is a sign. We only had basically, ok spreads up to $1,000,000 by the S&L’s. I read that most of Manhattan recent high end sales were all cash. You can’t run the industry without financing.
I think this may be the beginning. The fed has to bring in securitizing to get the high end moving. There is no way to raise the money by the banks holding all the big loans.