I’m asked all the time what types of homes are selling. Lately, my answer has been “lower priced homes”. More specifically, homes 
under the conforming loan limit for Boulder County. Up until very recently Boulder County’s upper limit for conforming loans has been $417,000. Recently it was increased to $460,000. 
Loans above the conforming limit are called “jumbo loans”. Conforming loans can be sold on the secondary market facilitated by Fannie Mae and Freddie Mac, jumbo loans can’t. In the past there was not that much of a difference between a conforming loans in terms of rate. It was higher but in the same ballpark. Now, since the credit crunch, jumbo loans are much more expensive. This premium in rate is slowing sales in the price ranges where buyers do not qualify for a conforming loan without a huge down payment.
Here is why this increase will make a difference. The increase in the loan limit will help sell a few more homes in the $500,000 to $600,000 range. It makes those homes more affordable to many more buyers who without a larger down payment could not make the numbers work. It won’t make a big impact for us but everything helps.
I’ve spoken with several lenders about this, and while they acknowledge Fannie Mae has set a higher limit in Boulder County, none of the lenders are willing to honor it. They still charge the same rate as they do for a jumbo loan for loans between $417K and $460K.Why is that? If the objective is to help prospective buyers of homes in the $500K range, it’s not happening.
That is a very good question. In working with this over the past couple of months the range between $417,000 and $460,000 is being considered differently than a straight conventional loan. The interest rate for the amount above $417,000 is a bit higher. You are right in the fact that is not opening up the market above $500k. There are of course other factors.