FHA Loan Limits Extended Through 2010

by Peter G. Miller
November 2nd, 2009

There was little question about this one: The FHA mortgage limits now in place have been extended through 2010. There are, in fact, exactly the same as at the end of 2008. See here for a full list of 2010 FHA loan limits.

In real terms there was no other choice. Politically, areas with expensive homes need as much help as possible to maintain prices. Economically, FHA loans are now a huge part of the market and no one wants to fool with something which is successful.

“Given the lack of a private secondary mortgage market, FHA, Fannie Mae and Freddie Mac are pretty much the only game in town,” says Robert E. Story, chairman of the Mortgage Bankers Association. “Extending the current loan limits through 2010 will allow more loans to qualify for these important programs and will help keep mortgage credit more accessible and affordable for qualified borrowers.”

Loan limits used to be universal, one number for the entire country. But now loan limits have become localized. The maximum for a single-family FHA mortgage in the continental US is $729,750 for high-cost areas — but not everywhere is a “high-cost” area.

To find out how much FHA mortgage financing is available for your area either ask local lenders and real estate brokers or go to HUD’s FHA mortgage limit page.

There are essentially four sets of FHA loans limits:

___ The maximum you can borrow for “high-cost” areas.

___ The basic or minimum FHA loan limit.

___ The loan limit for properties in Alaska, Hawaii, Guam and the Virgin Islands.

___ The loan limit for FHA reverse mortgage.

In practical terms, the deal is that you can borrow as much as $729,750 in high-cost areas, at least $271,050 anywhere in the continental US and $1,094,625 in Alaska, Hawaii, Guam and the Virgin Islands. The numbers get larger for properties with two, three or four units — however, to qualify for FHA financing when properties have two to four units borrowers must actually live in one unit.

Continuing Resolution

As of this writing the actual loan limit extension is contained in HR 2996, legislation passed by both the House and the Senate and awaiting the President’s signature. It would surprise everyone if this bill is not signed, so unless you hear screaming from lenders in the next few days the higher loan limits can be regarded as a done deal.

The term “FHA” does not actually appear in the legislation. Like much in Washington, you need a translator of some sort to follow what is being said. For the fun part of the day, read below….

‘SEC. 166. (a) LOAN LIMIT FLOOR BASED ON 2008 LEVELS.— For mortgages for which the mortgagee issues credit approval for the borrower during calendar year 2010, if the dollar amount limitation on the principal obligation of a mortgage determined under section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)) for any size residence for any area is less than such dollar amount limitation that was in effect for such size residence for such area for 2008 pursuant to section 202 of the Economic Stimulus Act of 2008 (Public Law 110–185; 122 Stat. 620), notwithstanding any other provision of law or of this joint resolution, the maximum dollar amount limitation on the principal obligation of a mortgage for such size residence for such area for purposes of such section 203(b)(2) shall be considered (except for purposes of section 255(g) of such Act (12 U.S.C.1715z-20(g))) to be such dollar amount limitation in effect for such size residence for such area for 2008.”

There. Isn’t that clear….

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