Effective March 6, 2008, HUD will offer temporary FHA Jumbo loan
limits that will range from $271,050 to $729,750 (Limits).
Overall, the change in loan limits will help provide economic
stability to America's communities. The maximum amount of $729,750
will only be applicable to extremely high-cost metropolitan areas.
Previously, FHA's loan limits in these very high-cost areas were
capped at $362,790.
The Economic Stimulus Act of 2008 permits FHA to insure loans on
amounts up to 125 percent 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 percent and 175 percent 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 FHA-insured mortgage loans endorsed with HUD’s publication of
the increased loan limits today, and it lasts until December 31,
2008.
By increasing loan 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 FHA Secure, FHA's refinancing
product. By focusing on 30-year fixed rate mortgages, FHA helps
homeowners avoid and escape the risks associated with exotic
subprime mortgage products, which have resulted in rising default
and foreclosure rates.
In January 2009, FHA's 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.
If a homeowner is pursuing a cash-out refinance and the loan
balance exclusive of FHA’s upfront mortgage insurance premium will
exceed $417,000, the loan-to-value may not exceed 85 percent of
the appraiser’s estimate of value. |
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