Contra Costa County Loan Limits Area Going Up in 2021

Rising home values across the San Francisco Bay Area have prompted federal housing regulators to increase the conforming loan limits for Contra Costa County in 2021.

The loan limit for a single-family home in the area will go up to $822,375, starting on January 2021. That’s an increase of $56,775 from the current (2020) conforming limit of $765,600.

Anything above this amount would be considered a jumbo loan in Contra Costa County. Home buyers with sufficient income and good credit can still qualify for jumbo mortgage financing in 2021.

Contra Costa County Conforming Loan Limit: $822,375

It’s that time of year, when federal housing officials review home-price trends across the nation to determine whether or not they’ll be increasing loan limits. And this year, it’s a resounding “yes.”

On November 24, the Federal Housing Finance Agency (FHFA) announced that it would be increasing the conforming loan limits for Contra Costa County — along with most other counties across the U.S.

These are the size limits that apply to conventional or “regular” mortgage loans, those that can be sold to Freddie Mac and Fannie Mae. They’ve been increased for 2021 to keep pace with rising home values in the U.S.

According to the November 24th FHFA announcement:

 In most of the U.S., the 2021 maximum conforming loan limit (CLL) for one-unit properties will be $548,250, an increase from $510,400 in 2020 … The new ceiling loan limit for one-unit properties in most high-cost areas will be $822,375 — or 150 percent of $548,250.

Contra Costa County is one of the “high-cost” areas mentioned in the above quote. So it will receive the maximum or “ceiling” limit of $822,375, for a single-family home.

Multi-family properties, such as two-unit duplexes and three-unit triplexes, have higher caps. Here are the 2021 conforming loan limits for Contra Costa County, across all property types.

• 1-unit: $822,375
• 2-unit: $1,053,000
• 3-unit: $1,272,750
• 4-unit: $1,581,750

But not all home buyers are limited to the $822,375 cap for a single-family property. Those with sufficient income can still borrow more than the conforming loan limit for their county, by using what’s known as a “jumbo mortgage.” (More to follow on that.)

Note: The Federal Housing Administration or FHA — not to be confused with the FHFA mentioned above — has its own set of limits for the FHA loan program. They are different from the conforming amounts shown above. The Department of Housing and Urban Development (HUD) should be announcing the revised 2021 FHA limits sometime in December. We’ll keep you posted!

Home Prices Rose Steadily This Year

Home prices in Contra Costa County, California have risen steadily throughout 2020. You might not expect that, given the ongoing coronavirus pandemic and economic downturn. But the numbers don’t lie. Contra Costa home prices are up, big time.

According to the California Association of Realtors, the median sale price for existing single-family homes in the county rose by 15.6% from October 2019 to October 2020. The overall median home value climbed by 7% over the past year or so, according to the real estate data company Zillow.

Any way you measure it, home prices in Contra Costa County have risen steadily throughout 2020, with additional gains expected next year. And that’s why the conforming loan limits are going up next year.

Here in the Bay Area, six of the nine counties in our region fall into the “high-cost” bracket mentioned in the quote above. Those six counties will have the maximum conforming loan limit of $822,375 in 2021. Contra Costa falls into that group, as does neighboring Alameda County.

The other three counties (Napa, Solano and Sonoma) will have lower limits in 2021, due to the comparatively lower home prices in those areas.

Jumbo Mortgage Threshold Increased as Well

As mentioned earlier, a “jumbo” mortgage loan is one that exceeds the conforming limit for the county where the home is being purchased. By that definition, a jumbo loan in Contra Costa County is anything above the $822,375 cap mentioned earlier.

Due to the larger amount being borrowed, jumbo mortgage products tend to have stricter requirements for borrowers. They often have higher mortgage rates as well, at least in recent months. That’s why some borrowers shy away from jumbo loans and try to stay within the conforming range.

Another financing strategy is to combine a first and second mortgage, in what’s known as a piggyback loan. This allows the borrower to purchase a higher-priced home without venturing into jumbo territory — and possibly while avoiding mortgage insurance at the same time.

Questions? You have a lot of options and choices when it comes to choosing a mortgage loan in Contra Costa County. And we can help. Bridgepoint Funding is based in Walnut Creek. We’ve been serving the area for going on 20 years. Please contact us with your mortgage-related questions!