Manhattan (NY) Loan limits increased to $729,750

The House and Senate passed the stimulus package called the "American Recovery and Reinvestment Act of 2009" President Obama is expected to sign the bill tomorrow.

While many real estate professionals and home buyers were hoping for a $15,000 tax credit for all home buyers without income caps that was introduced in the Senate unfortunately the final bill only includes an $8000, tax credit for first time home buyers that earn less than $75,000 per year ($150,000 on a joint return).

• Individuals with incomes between $75,001 and 94,999 (single) or $150,001 and $169,999 (joint returns) are eligible for a partial tax credit.
• Individuals with incomes greater than $95,000 (single) or $170,000 (joint return) are not eligible for this tax credit.

The bill includes a return to the higher temporary loan limits put in place for Fannie Mae, Freddie Mac and FHA. during 2008. In 2009 the limits went down to $625,000 for New York.

The bill allows Fannie Mae and Freddie Mac to once again purchase and guarantee loans of up to $729,750 in high-cost areas such as Manhattan. This applies to purchases after Jan 1, 2009 until December 1, 2009.

$729,750 is approximately 80% of $912,000. $729,750 is approximately 85% of $858,000. Most coops require a minimum of 20% down and although condos only require 10% down most lenders currently are requiring a minimum of 15% down.

Loans for more than $729,750 are called jumbo loans. Interest rates are much higher on jumbo loans. Because of the credit crises jumbo loans are harder to qualify for and rates are rising. Jumbo loans are not backed by the government they have been sold on the secondary market and there are less investors interested in them these days.

So while most buyers in Manhattan including first time buyers may not be eligible for the tax credit because of higher incomes in New York, the increase to the high conforming amount back to $729,750 will cost much less than a jumbo loan. Jumbo loans are currently difficult to acquire. High down payment (50%) are required on loans above $1 million.

To find out how much you qualify for click here for a free mortgage consultation and pre-approval.

Conforming Loan Limits Expire End of Year

As part of the recent economic stimulus package the FHA conforming loan amount was raised in New York from $417,000 to $729,750. The $729,750 conforming loan amount expires the end of 2008.

$729,750 is 80% of $912,000. $729,000 is 85% of $858,000. Most coops require a minimum of 20% down and although condos only require 10% down most lenders currently are requiring a minimum of 15% down.

Loans for more than $729,750 are called jumbo loans. Interest rates are much higher on jumbo loans. Because of the credit crises jumbo loans are harder to qualify for and rates are risings. Jumbo loans are not backed by the government they have been sold on the secondary market and there are less investors interested in them these days.

Perhaps there will be another stimulus package that will raise the conforming loan amount for New York again but it expires the end of the year. The loan amount is expected to either go back down to $417,000 or In the $600K range.

At first coops were not eligible for the $729,750 loans. Coops are allowed now unfortunately there is such a short window in Manhattan to take advantage of the lower rate.

Any buyers on the fence, if you need financing, buying and closing before the end of 2008 will save you a lot in monthly payments. It is a buyer's market, there are many great deals on beautiful apartments.

Now is a great time to buy and close on a Manhattan apartment before the end of the year. Start the new year in a new home.

To become one of my VIP Manhattan buyers and recieve listings click here or for new developments and conversions in Manhattan click here.

Schumer wants to soften limits on Fannie, Freddie

Sen. Charles Schumer (D-N.Y.) proposed legislation last week to push up the caps on Fannie Mae and Freddie Mac's mortgage portfolios by a minimum of 10 percent for one year in an effort to ease the credit crunch.

Under the bill, 50 percent of the approximately $73 billion combined boost in their portfolios would be put toward refinancing subprime adjustable-rate mortgages into less costly loans; and the conforming loan limit would be raised to $625,000 in the priciest housing markets during the one-year period.

Though Schumer insists that "this is what Fannie and Freddie were designed for," such a move is opposed by the Bush administration as reported in Wall Street Journal (09/10/07) by Damian Paletta.

Naturally, the Bush administration would be against raising the conforming loan limit to $625,000 in the priciest housing markets. The priciest housing markets including Manhattan are in blue states.

While subprime has not been a big issue in affluent co-op dominated Manhattan, raising the conforming loan limit from $417,000 to $625,000 will help many qualified home buyers in NYC.

A buyer putting 20% down would be able to get a conforming loan on a $780,000 home vs the current $521,250 price cap.

Unfortunately $625,000 is still below the average price for a Manhattan apartment. Most Manhattan buyers seeking financing will still need the more expensive jumbo mortgages.