FHA Announces New Loan Limits

Dollar sign2This week, FHA announced its loan limits for the 2009 calendar year.

These limits are governed by the new stimulus plan, The American Recovery and Reinvestment Act of 2009 (ARRA), that the President signed into law ten days ago.

Under ARRA, the revised FHA loan limits for 2009 will be set at the higher of the loan limits established for 2008 under the Economic Stimulus Act of 2008 (ESA) or those established for 2009 under the Housing and Economic Recovery Act of 2008 (HERA).

National floor limits:

Under both HERA and ESA, and thus under ARRA as well, the FHA national floor limits remain set at the 65 percent amount (the floor) by property size: One-Unit $271,050, Two-Unit $347,000, Three-Unit $419,400 Four-Unit $521,250.

High-Cost Ceiling

Any area where the limits exceed the floor is known as a high cost area. Because ESA used a higher multiple in establishing the national FHA loan limit ceiling, as a percentage of the conforming loan limit, than does HERA (175 percent versus 150 percent), the ESA national ceiling is binding under ARRA for 2009.

By property size, these national ceiling limits are as follows: One-Unit $729,750, Two-Unit $934,200, Three-Unit 1,129,250, Four-Unit $1,403,400.

For a list of high-cost areas listed by county, which includes much of California, Aspen, Salt Lake, D.C. suburbs, many counties in New Jersey and New York, and Nantucket, see High Cost Areas.

See a list of counties between the floor and ceiling.

For more information of these limits, see FHA Letter to Mortgagees.

See our feature, Fannie Mae Unshackes Investors.

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