Changes Again in High Cost Loan Limits

Once again, inaction by Congress has allowed mortgage loan limits to be decreased as of the first of this month. The change impacts the maximum amount of a home loan that qualifies for funding through FHA, Fannie Mae and Freddie Mac.

In 2008, Congress raised the limits up to $729,750 in some areas to make larger mortgages available in higher priced housing markets. The new limits will now drop FHA and GSE loan limits to 115% of local area median home price with a cap of $625,500 (from the current limit of 125% of local area median home price with a cap of $729,750). Under these guidelines, single-family homes will be allowed to qualify for FHA mortgages up to a maximum of $271,050 in low cost areas and up to a maximum of $625,500 in high cost areas.

Update: Congress has voted to reinstate the FHA loan limits through 2013 at 125% of local area median home prices, up to a maximum of $729,750 in the highest cost markets. The floor will remain at $271,050. The loan limits for Fannie Mae and Freddie Mac backed mortgages will remain at 115% of local area median home prices, up to a maximum of $625,500.

Here are the HUD links so you can look up the new FHA and Fannie/Freddie loan limit changes - visit https://entp.hud.gov/idapp/html/hicostlook.cfm. Just choose your state, enter your county name and select the appropriate loan limit type and the limit year Oct 1, 2011 - Dec, 31 2011. HUD also has a comprehensive listing of the new loan limits in all counties throughout the country - http://www.hud.gov/pub/chums/file_layouts.html.

Examples of changes in our local counties here in Southwest Florida include the following:

• Lee County (including Bonita Springs, Estero, Cape Coral and Ft. Myers) – Median Price $105,000 (was $235,695), New FHA Loan Limit $271,050, New Fannie/Freddie Limit $417,000.
• Collier County (including Naples) – Median Price $280,000 (was $390,000), New FHA Loan Limit 271,050 (was $448,500), New Fannie/Freddie Limit 417,000 (was $448,500).