California Compliant Loan Limits To Increase In 2021, Due To Rising Prices

Earlier this week, the Federal Housing Finance Agency announcement that compliant loan limits for California will increase in 2021. This is a direct response to rising home values ​​statewide.

The 2021 loan limits for California counties will range from $ 548,250 to $ 822,375, for a single-family property. This is a significant increase from the current caps, which range from $ 510,400 to $ 765,600 depending on the county. These changes take effect on January 1, 2021.

California gets higher loan limits in 2021

The term “compliant loan limit” refers to the maximum amount of an ordinary or conventional mortgage loan. Conventional mortgage products can be sold to Freddie Mac and Fannie Mae and then resold to investors.

In order to go through this resale process, home loans must meet certain requirements and parameters. And that includes meeting a maximum size limit.

When a person borrows Following as the loan limit conforms for their particular county, it is a “jumbo” mortgage. Lenders usually set higher standards and requirements for jumbo loans, due to the larger amount borrowed. This can include higher credit scores and larger down payments, among others.

Compliant loan limits vary by county because they are based on the median home value. For California’s 58 counties, compliant loan limits for 2021 will range from $ 548,250 to $ 822,375. High-priced real estate markets (with a higher median house price) tend to have higher limits, and vice versa.

Ten of California’s 58 counties are considered “high cost areas” and therefore have the maximum compliant loan limit of $ 822,375. This applies to most of the San Francisco Bay Area, Metro Los Angeles, Orange County, and Santa Cruz. See the table below for more details.

Table: Compliant loan limits by county

The table below shows the 2021 compliant loan limits for all counties in California. This table has been adapted from a table provided by the FHFA.

Note: The “one unit” column on the right is for an ordinary single-family home. There are higher limits for multi-family properties, such as duplexes and triplexes. Thus, the figures below apply to typical scenarios of buying a house with only one residence.

county Limit of one unit
ALAMEDA $ 822,375
ALPINE $ 548,250
AMATEUR $ 548,250
BUTTE $ 548,250
CALAVERAS $ 548,250
COLUSA $ 548,250
CONTRA COSTA $ 822,375
NORTH LED $ 548,250
ELDORADO $ 598,000
FRESNO $ 548,250
GLENN $ 548,250
HUMBOLDT $ 548,250
IMPERIAL $ 548,250
INYO $ 548,250
KERN $ 548,250
Kings $ 548,250
LAKE $ 548,250
LASSEN $ 548,250
LOS ANGELES $ 822,375
MADEIRA $ 548,250
MARINE $ 822,375
MARIPOSE $ 548,250
MENDOCINO $ 548,250
MERCED $ 548,250
MODOC $ 548,250
MONO $ 548,250
MONTEREY $ 739,450
PANA $ 816,500
NEVADA $ 548,250
ORANGE $ 822,375
TO PLACE $ 598,000
FEATHERS $ 548,250
RIVER EDGE $ 548,250
SACRAMENT $ 598,000
SAN BÉNITO $ 822,375
SAN BERNARDINO $ 548,250
SAN DIEGO $ 753,250
SAN FRANCISCO $ 822,375
SAN JOAQUIN $ 548,250
SAN LUIS OBISPO $ 701,500
SAN MATEO $ 822,375
SANTA BARBARE $ 660,100
SANTA CLARA $ 822,375
SANTA CRUZ $ 822,375
SHASTA $ 548,250
SIERRA $ 548,250
SISKIYOU $ 548,250
SOLANO $ 550,850
SONOMA $ 707,250
STANISLAS $ 548,250
SUTTER $ 548,250
TEHAMA $ 548,250
TRINITY $ 548,250
TULAR $ 548,250
TUOLUMNE $ 548,250
VENTURA $ 739,450
YOLO $ 598,000
YUBA $ 548,250

Another year, another increase

The maximum mortgage amounts for conventional loans are determined by the Federal Housing Finance Agency (FHFA). This agency oversees Freddie Mac and Fannie Mae, the “government sponsored companies” that buy mortgages from lenders and sell them to investors.

Each year, FHFA officials review house price trends in counties across the country and decide whether or not to increase loan limits. This year, they determined that home prices across the country had risen enough to warrant higher loan limits for 2021.

A response to rising house prices

In most California cities, home values ​​have risen steadily throughout 2020. This may seem counterintuitive, given the coronavirus pandemic and the ongoing economic downturn. But the real estate market has been the only bright spot in the economy at large.

Record mortgage rates and strong buyer demand have pushed home prices up at a time when one would expect the opposite trend. Due to these trends, California will have higher compliant loan limits in 2021.

According to real estate data company Zillow, the median home value in California has increased about 6.3% in the past year. Company analysts predict even bigger gains for 2021.

In November, the company said, “California home values ​​have risen 6.3% in the past year and Zillow predicts they will rise 8.3% next year.

A recent report from the California Association of Realtors showed even bigger gains, analyzing a different metric. According to their November 2020 report, the median selling price of existing single-family homes across the state increased 17.5% from October 2019 to October 2020.

Given these trends, it’s no surprise to see higher compliant loan limits for California counties in 2021.

Natalie C. Parsons