The Federal Housing Finance Agency increased the maximum amount for a conforming loan to $822,375 in Santa Clara and San Mateo counties in 2021. This is an increase of 7.4% from the limit of $765,600 in 2020. Assuming 20% down payment, a purchase price of up to $1,028,000 should qualify for a lower interest rate than a higher amount. Higher priced homes can still qualify by increasing the down payment so the loan amount is conforming.
Interest rates for “conforming” loans are typically lower than rates for “jumbo” loans. Wells Fargo is currently advertising a quarter-point difference. Lenders can typically “sell” conforming loans to investors in the financial markets, where as jumbo loans are retained in their portfolio.
Silicon Valley is considered a “high-cost” area in which the median home value exceeds the baseline limit of $548,250 by more than 115%. The maximum ceiling is 150% of the baseline. The map below shows conforming loan limits by county. Interesting to see the location of “high-cost” areas across our nation.
You can read the press release here.