loan limits california

California Loan Limits Raised for 2021

As a result of ever-increasing home prices, California jumbo loan limits have been raised for 2021. In counties across the Golden State, any financing amounts over $548,250 will be regarded as a jumbo loan. The exceptions are primarily the coastal counties which include, San Francisco bay area counties and Los Angeles and Orange County where the new ceiling is capped at $822.375.

California Conforming Loan Limits

In November, the Federal Housing Finance Agency (FHFA) announced that it would increase conforming loan limits for most counties across the country. These ceilings apply to conventional loans that can be bought by Freddie Mac or Fannie Mae. The conforming limits were raised in the entire state of California, along with most counties throughout the United States barring a handful.

This helps borrowers who are using a loan product such as an FHA or conventional loan that offer qualified borrowers down payments of just 3.5% and 3% respectively.

Here are the revised maximum conforming loan sizes for the state:

Most inland counties: $548,250 to $517,500
Orange County: $822,375
L.A. County: $822,375
Ventura County: $739,450
San Diego County: $753,250
San Luis Obispo: $701,500
Santa Barbara: $660,100
Santa Cruz: $822,375
San Mateo: $822,375

These ares the maximum amounts for conforming loans, which are loans that are able to be bought by Fannie Mae and Freddie Mac. If the loan is over these limits it’s regarded as a jumbo loan in California. When it moves to jumbo financing, the most leverage you can get is 95 loan-to-value or 90 LTV financing.

A Reaction to Home Price Appreciation

According to the California Association of Realtors (CAR), forty-five of California’s 51 counties reported a year-over-year price increase, with 23 of them increasing by rates over 10-percent. The strongest price appreciation for all regions was in the Bay Area leading with a 12.5 percent regional yearly price improvement. Overall, the value of homes have gone up at a rate of 7.8% according to Zillow.

Additional data from CAR shows these Bay Area counties had median home prices increase by:
27 percent year-over-year to $1,282,500 in Santa Clara County
22.1 percent to $1,486,000 in San Mateo County.
10.3 percent to $1,500,000 in San Francisco
10 percent to $880,000 in Alameda County
8.1 percent to $615,000 in Contra Costa County

Based on the data provider, home values in California increased somewhere between 7% and 9% over the last 12 months (as of December 2020). Thanks to these statistics and mortgage rates remaining fairly stable, a higher conforming loan limit in 2021 for California was a no-brainer.