FHA to Drop Single-Family Loan Limit on Oct. 1
September 1, 2011
September 1, 2011
The Federal Housing Administration (FHA) announced this week that the insurance limit in the highest-cost areas of the country will be reduced starting on Oct. 1. Loan limits in most other parts of the nation will remain unchanged.
The changes, which are required by the Housing and Economic Recovery Act of 2008 (HERA), will lower the “ceiling” for single-property loans in high-cost areas to $625,500, down from $729,750. However, the maximum loan limits in Alaska, Hawaii, Guam and the Virgin Islands may stand at 150% of this ceiling “to account for higher costs of construction,” the FHA said.
The current single-unit loan floor for areas where housing costs are relatively low will remain unchanged at $271,050.
Two-unit dwellings will have a floor of $347,000 and a ceiling of $800,775, while three-unit dwellings will have a floor of $419,425 and a ceiling of $967,950. Four-unit dwellings will have a $521,250 floor and a $1,202,925 ceiling.
The mortgage loan limit and maximum claim amount for FHA-insured reverse mortgages will remain unchanged, holding at $625,500.
The loan limit changes are expected to impact borrowers and lenders in 669 counties throughout the nation.
The Homeownership Affordability Act of 2011, which was introduced early this month by Sens. Robert Menendez (D-NJ) and Johnny Isakson (R-Ga.), and co-sponsored by Sen. Dianne Feinstein (D-Calif.), would allow the FHA, Fannie Mae, Freddie Mac, and the Veterans Administration (VA) to guarantee mortgages up to $729,750, or 125% of local median prices for single-family homes, through Dec. 31, 2013.
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