Monday, November 24, 2008

FHA Loan Limits Are Changing Again

FHA loan limits are changing again! Here are the new rules.

Effective January 1, 2009, the limits will be lowered to comply with the Housing and Economic Recovery Act of 2008 (the big bail out act passed back in July). The loan limits had been raised when the Economic Stimulus Act of 2008 was passed in February (that was the previous bail out act), but those were just temporary increases due to expire at the end of 2008. To make it a bit more complicated, the lenders who underwrite the FHA loans are concerned that they will get stuck with loans that are over the limit and FHA won't insure them, so just about everyone lowered the limits this past week, even though FHA rules say they can keep them at the higher amounts until January 1.

It's not as bad as it sounds, though. The new limits are still much higher than the old limits that were in effect before February, even though they are lower than they have been for the past 9 months.

The bottom line is this. In Adams, Arapahoe, Broomfield, Denver, Douglas, and Jefferson Counties, the new limit is $368,000. In Boulder County, the new limit is $402,500. These numbers are the most that FHA will lend on a one-unit purchase. The limits go up significantly for 2, 3, and 4 unit properties.

These new limits are posted on FHA's loan limit web site, but so are the old limits for 2008, so if you use the web site, make sure you choose the correct year. All you need to do is select the correct STATE and the correct LIMIT YEAR from the menus, and then click on SEND. There is no need to select anything else to get the loan limits. Here's the link to the FHA site:

https://entp.hud.gov/idapp/html/hicostlook.cfm

Just a reminder, FHA loans are NOT limited to first time homebuyers and there are NO income limitations. AND the seller can pay a full 6% towards the buyer's closing costs. Don't lose out on a deal because you are getting incorrect information.

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