The Department of Housing and Urban Development today implemented temporary increases in FHA loan limits in every housing market that it estimated will allow nearly 240,000 additional families to take advantage of the government-backed mortgage insurance program.
The new limits for Federal Housing Administration loan guarantee programs are based on median home price, and range from a new floor of $271,050 up to a cap of $729,750 in the highest-priced markets, such as New York, Los Angeles, San Francisco and Washington, D.C. HUD said 75 out of 3,200 housing markets will see FHA loan limits bumped up to the maximum.
HUD also published temporary increases in the conforming loan limit that will allow Fannie Mae and Freddie Mac to purchase "jumbo light" loans above the $417,000 conforming loan limit until the end of the year. The government-sponsored enterprises, or GSEs, are still in the process of updating their underwriting standards and loan processing software to make loans of up to $729,750.
HUD has created a new Web page that provides the new conforming loan limits and limits for FHA-backed loans by state, county or metropolitan statistical area. The Web page is capable of generating tables for one or several areas.
The new loan limits are based on county median home prices. Properties located in a metropolitan statistical area (MSA) that includes more than one county will be subject to the loan limit for the entire MSA, which is determined by the county with the highest median home price.
In high-cost areas, single-family loan limits for FHA, Fannie and Freddie are being increased to 125 percent of the median home price, with an upper cap of $729,750. The cap is $934,200 for two-family homes, $1,129,250 for three-family homes, and $1,403,400 for four-family homes, HUD said in a letter to lenders.
In a press release, federal regulators who oversee Fannie and Freddie said the conforming loan limit will be increased in 71 MSAs that encompass 266 counties and cities, and an additional 21 counties that are not part of an MSA. The Office of Federal Housing Enterprise Oversight published its own list of counties and MSAs where the conforming loan limit will be increased.
The existing, $417,000 single-family conforming loan limit for Fannie and Freddie will remain in place in areas where the median home price is $333,600 or less. The floor for FHA loan limits is being raised from $200,160 to $271,050.
The new limits, part of an economic stimulus package that also includes tax rebates, will expire at the end of the year, unless Congress makes permanent increases part of pending legislation that would strengthen oversight of Fannie and Freddie and modernize FHA loan guarantee programs.
In a press release, HUD Secretary Alphonso Jackson said that passage of an FHA modernization bill introduced two years ago could help FHA serve an additional 250,000 families 2008.
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