FHA Home Loans Refinancing

New FHA Loan Limits


Effective March 6, 2008, HUD offered temporary FHA loan limits that will range from $271,050 to $729,750 for FHA refinancing and purchase mortgages. Overall, the change in loan limits will help provide economic stability to America’s communities and give nearly 240,000 additional homeowners and homebuyers a safer, more affordable mortgage alternative. The maximum loan amount of $729,750 will only be applicable to extremely high-cost metropolitan areas. Previously, FHA loan limits in these very high-cost areas were capped at $362,790.

The Economic Stimulus Act of 2008 permits FHA loans to insure mortgages on amounts up to 125 % of the area median house price, when that amount is between the national minimum ($271,050) and maximum ($729,750). The new minimum and maximum loan limits are based on 65 % and 175 % of the conforming loan limits for Government-Sponsored Enterprises in 2008, which is $417,000. The FHA used a combination of existing government data sets and available commercial information to determine the median sales price for each area. The change in loan limits are applicable to all insured FHA home loans endorsed with HUD’s publication of the increased loan limits today, and it lasts until December 31, 2008.

By increasing FHA mortgage limits nationwide, FHA will provide much needed liquidity and stability to housing markets across the country. Already, as conventional sources of mortgage credit have been contracting, FHA has been filling the void. From September to December 2007, FHA facilitated more than $38 billion of much-needed mortgage activity in the housing market, more than $15 billion of which was through FHASecure, FHA’s home refinancing product. By focusing on 30-year fixed FHA mortgage rates, FHA helps homeowners avoid and escape the risks associated with exotic subprime mortgage products, which have resulted in rising default and foreclosure rates. “This is not an easy crisis to address, and there is no silver-bullet, but I know that we can help hundreds of thousands of people keep their homes, and we can calm the waters,” said HUD Secretary Jackson.

In January 2009, the FHA maximum loan limit will return to $362,790, unless the U.S. Congress approves bipartisan legislation to permanently increase loan limits as part of the FHA Modernization bill, which is still awaiting final approval on Capitol Hill.  Check the FHA Home Loan Company website for 2010 FHA Loan Limits.



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