Congress Restores Higher FHA Loan Limit for High-Cost Areas

Congress has restored higher limits on loans – from $625,500 to $729,750 – backed by the Federal Housing Administration in higher-cost areas.
FHA estimates that only a fraction of borrowers living in the nation’s pricier areas will be affected, but lawmakers realize that the ailing housing market cannot afford any impediment toward recovery.
President Obama signed the measure into law reinstating the loan limit that expired on Oct. 1. It had been lifted to $729,750 temporarily three years ago at the height of the financial crisis.
The current standard, or “floor” loan limit, for areas where housing costs are relatively low remains unchanged at $271,050 for single-family homes. FHA loan limits vary based on an area’s median home price, but all fall within the range of $271,050 and $729,750 for single-family homes.
The FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. The agency has also come under increased scrutiny since it said in a report to Congress that it could require a taxpayer bailout.
Loans that can be backed by mortgage financing giants Fannie Mae and Freddie Mac, which have drawn more than $170 billion in bailouts, were not included in today’s reinstatement of loan limits.
Last year, only three percent of FHA-insured borrowers lived in high-cost areas.
But the change in FHA loan limits will affect 669 counties across the country, out of a total of 3,234 jurisdictions in which FHA insures home loans.

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