My Business & Mortgage Blog

Written by: Stacey Sprain

2008 FHA Max Mortgage Limits

Mortgagee Letter 2008-02 described 2008 Mortgage Limits, which would have been effective for January 1 – December 31, 2008, as the following:

• The National Housing Act provided that the mortgage limit for any given area shall be set at 95% 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 could not exceed 87% of the Freddie Mac loan limit, nor be lower than 48% of the Freddie Mac loan limit for a residence of applicable size.

**One Unit Standard Max Mortgage = $200,160

• In areas where 95% of the median house price exceeded the 87% figure, the mortgage limits were set at the 87% amount.

** One Unit High-Cost Max Mortgage = $362,790.

• In addition, the National Housing Act permitted mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands to be adjusted up to 150% of the above ceilings, to account for higher costs of construction.

**One unit Max Mortgage for Alaska, Guam, Hawaii and Virgin Islands = $544,185.

Economic Stimulus Act 2008

Mortgagee Letter 2008-06 was brought to us courtesy of “ESA” and the following changes to FHA mortgage limits were announced which would have been effective March 1 – December 31, 2008:

• The Act provided that the mortgage limit for any given area would 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 could not 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.

**One Unit Standard Max Mortgage ESA = $271,050

• In areas where 125% of the median house price exceeded the 175% limit of $729,750 for a 1-unit property, the mortgage limits were set at the 175% amount.

**One Unit High-Cost Max Mortgage ESA = $729,750

• In addition, the National Housing Act permitted mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands to be adjusted up to 150% of the above ceilings, to account for higher costs of construction. 

**One unit Max Mortgage ESA for Alaska, Guam, Hawaii and Virgin Islands = $1,094,625

Housing & Economic Recovery Act- 2009 Loan Limits

• On November 7, 2008 HUD issued Mortgagee Letter 2008-36 to explain 2009 Max Mortgage Limits associated with the Housing and Economic Recovery Act (HERA). HERA provided that the mortgage limit for any given area would be set at 115 percent 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 could not exceed 150 percent of the Freddie Mac national loan limit, nor be lower than 65 percent of the Freddie Mac national loan limit for a residence of applicable size.

**One Unit Standard Max Mortgage HERA = $271,050

• In areas where 115 percent of the median house price exceeded the 150 percent figure, the mortgage limits were set at the 150 percent amount.

**One Unit High-Cost Max Mortgage HERA = $625,500

• Section 214 of the National Housing Act permitted mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands to be adjusted up to 150% of the above ceilings, to account for higher costs of construction.

**One Unit Max Mortgage Alaska, Hawaii, Guam & Virgin Islands = $938,250.

Finally came the most recent Mortgagee Letter 2009-07 which announced changes associated with the American Recovery and Reinvestment Act of 2009 (ARRA) which was signed into law on February 17th.

• Under ARRA, the revised FHA loan limits for 2009 will be set at the higher of the loan limits established for 2008 under the Economic Stimulus Act of 2008 (ESA) or those established for 2009 under the Housing and Economic Recovery Act of 2008 (HERA).

**Therefore, under both HERA and ESA, and thus under ARRA as well, the FHA national floor limits remain set at the 65 percent amount (the “floor,”) by property size, as follows:

• One Unit Standard Max Mortgage ARRA = $271,050

**Because ESA used a higher multiple in establishing the national FHA loan limit ceiling, as a percentage of the conforming loan limit, than does HERA (175 percent versus 150 percent), the ESA national ceiling is binding under ARRA for 2009.

**One Unit High-Cost Max Mortgage ARRA = $729,750

**Loan limits for the special exception areas of Alaska (AK), Hawaii (HI), Guam (GU) and Virgin Islands (VI) also follow the ARRA rule of choosing the higher of the 2008 ESA and 2009 HERA limits. The National Housing Act permits mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands to be adjusted up to 150 percent of the above national ceilings, by property size, to account for higher costs of construction.

**One Unit Max Mortgage Alaska, Hawaii, Guam & Virgin Islands= $1,094,625

Hopefully laying it all out in this manner has helped you understand these many changes as it certainly helped me!

Stay tuned next week as I’ll define all the crazy terms associated with the numerous conventional loan amount changes over this past year!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)