The 2013 FHA and VA loan limits have been announced.
While the loan limit for FHA loans will remain at $697,500 in San Diego County (announced in Mortgagee Letter 12-26), VA loan limits have been decreased.
The FHA Loan limit in San Diego opens up the market for those who would normally not be able to purchase a home using conventional high balance or jumbo finanancing due to the higher down payment requirements on conventional loans. Interest rates on High Balance and Jumbo FHA loans are typically lower than their conventional counterpart though the Upfront Mortgage Insurance (UFMIP) and monthly MIP are higher on FHA loans than on conventional financing.
Effective for 2013, VA loan limits in San Diego County have dropped to $500,000 for those wanting to take advantage of of the zero down payment option. However, just as before, eligible borrowers can borrow higher amounts based on their available entitlement with a small down payment.
For example, someone with a full VA entitlement purchasing a home priced at $600,000 would require a down payment of $25,000 – approximately 4.2%. Though this figure is higher than an FHA required down payment of 3.5%, the totaly monthly payment would be considerably lower on a VA loan due to the lack of monthly mortgage insurance.
FHA and VA financing is an excellent way to go for those entering or moving up in the San Diego Real Estate market where the median price is $408,000 as of November 2012*
*Source: SDAR local economic report published 12/5/2012