September 20, 2011
The U.S. Department of Housing and Urban Development (HUD) recently announced changes to the loan amounts for Federal Housing Administration (FHA)-insured loans. The changes will be effective October 1, 2011 through the end of the year as noted in Mortgagee Letter 2011-29. If legislation is enacted to extend the current FHA-insured loan limits which expire on Sept. 30, HUD said it will publish a Mortgagee Letter defining the most recent loan limits for both FHA-insured Forward Mortgages and Home Equity Conversion Mortgages (HECMs).
For forward mortgage loans in non-high-cost areas, the loan limit for a one unit home remains at $271,050, and in high-cost areas, the loan limit for a one unit home will lower from $729,750 to $625,500 (i.e., from 175 percent of the Freddie Mac conforming loan limit of $417,000 to 150 percent of such amount). However, in a high-cost area, the maximum loan amount may not exceed 115 percent of the median home price, and thus, the loan limit may be less than $625,500. An attachment to the Mortgagee Letter provides the maximum loan amount for high cost areas in which the loan limit is more than $271,050 but less than $625,500.