Emergency economic legislation temporarily increased the limit on loans insured by the Federal Housing Administration. But that increase is set to expire this year. However, other legislation made permanent increases to maximum FHA loans.   H.R. 5140, the Economic Stimulus Act of 2008, was signed by President Bush on Feb. 13. Among other provisions, it temporarily increased– until Dec. 31, 2008 — the FHA home loan limit in high-cost areas to $729,750. Prior to the legislation, the FHA mortgage loans limit was $362,790.  H.R. 3221, the Housing and the Economic Recovery Act of 2008, was signed by Bush on July 30.

Among its provisions was a permanent increase to FHA mortgage loan amounts — which the U.S. Department of Housing and Urban Development said today would be $625,500 in high-cost areas. In low-cost areas, the limit is $271,050.  Unfortunately many FHA mortgage lenders believe they have been given a “raw deal” after the President signed a bill that mad the higher FHA loan limits permanent.  According to FHA mortgage banker, Pat O’Connell, “The mortgage industry has enough setbacks in the last two years for a lifetime…Homeowners need a FHA refinance loan they can count on.” 

Mortgage limits for FHA home loans for specific areas are set at 115 % of the median house price.  In high-cost areas, the FHA mortgage limit on a duplex is $800,775, while loans on triplexes can go as high as $967,950 and four-unit properties can be financed for up to $1,202,925, according to Mortgagee Letter 2008-36 distributed Friday. In low-cost areas, the maximum FHA loan on a four-unit property is $521,250.

In for Alaska, Guam, Hawaii and the Virgin Islands, the FHA loan limit is set at $938,250 for a single-family residence.  Last month, the Federal Housing Finance Agency confirmed the 2009 conforming FHA loan limit in high-cost areas at $625,500.  This month, HUD issued Mortgagee Letter 2008-35 indicating that a nationwide mortgage limit had been established on reverse mortgage loans at $417,000.