Temporary Loan Limit Increase for FHA

This Mortgagee Letter provides information on Federal Housing Administration single family mortgage limits as a result of enactment of the Economic Stimulus Act of 2008 (“the Act”).  These limits are effective for mortgages endorsed for insurance on or after the date of this mortgagee letter and remain in effect for those mortgages for which the mortgagee has issued credit approval for the borrower on or before December 31, 2008. 

FHA Single Family Programs Affected:

The mortgage limits described in this Mortgagee Letter are effective for those mortgages insured under the following Sections of the National Housing Act: Sections 203(b)(FHA’s basic 1-4 family mortgage insurance program), 203(h)(mortgages for disaster victims), 203(k)(rehabilitation mortgage insurance), and 234(c)(condominium units).  These limits do not apply to Section 255, Home Equity Conversion Mortgages (HECM).

Revisions to the Lowest Local Limits:

The Act provides that the mortgage limit for any given area shall be set at 125% of the median house price in that area, as determined by the Department of Housing and Urban Development, except that the FHA mortgage limit in any given area cannot exceed 175% of the 2008 Freddie Mac conforming loan limit of $417,000, nor be lower than 65% of the same 2008 Freddie Mac conforming loan limit for a residence of applicable size. 

Thus, in areas where 125% of the median house price is less than 65% of the Freddie Mac limit, the FHA limits are set at the 65% limit, i.e., the “floor,” as follows:

One-Unit         $271,050

Two-Unit        $347,000

Three-Unit       $419,400

Four-Unit       $521,250