Federal housing regulators on Wednesday said they are lowering the conforming loan limit for Jumbo loans – the maximum loan they will buy from lenders – by almost 17%.
The limit will drop to $625,500 from $729,750 in the priciest areas such as New York, California and Washington, D.C. Borrowers whose loans exceed the government maximum will need larger down payments or jumbo mortgages, which carry higher interest rates.
Unless Congress intervenes, the new limit takes effect in 85 days.
The new limit was supposed to take effect in January 2009, but the economic downturn led Congress to delay the implementation.