FHA Announces New Loan Limits Effective October 1, 2011
The FHA has announced changes to the FHA loan limits for the remainder of 2011 beginning October 1st. These new limits directly affect the Arizona housing market. The amount a home owner can borrow on an FHA loan for a single family residence is now $271,050, this is down from the previous amount of $346,250. This decrease of over 75 thousand dollars will effect any loan that does not have an FHA case# by the first of October.
In an August 19, 2011 press release, the FHA announced, “On October 1, 2011, the Federal Housing Administration (FHA) will implement new single-family loan limits as specified by the Housing and Economic Recovery Act of 2008 (HERA). As a result, FHA will reduce loan limits in the highest cost metropolitan areas of the country while limits would remain unchanged in most other parts of the nation.”
The new, lower limits for high-cost counties that take effect October 1, 2011 were originally scheduled to become effective back in 2009, but the FHA press release states, “continuing strains in credit markets led the Congress to delay implementation. The result has been nearly three years of higher loan limits for some areas based on the Economic Stimulus Act of 2008.
FHA sets loan limits based on the individual county, as of October 1st, all counties in Arizona are at the baseline $271,050 with the exception of Coconino. Coconino county will remain at $362,250 because of the higher ceiling of home prices in Flagstaff, the biggest city in the county. The FHA official site adds, FHA loan limits vary based on area median home price, but all will fall within the range of $271,050 and $625,500 for one unit properties.”
The FHA says the October 1 lower loan limits will affect “669 counties across the country, out of a total of 3,234 jurisdictions in which FHA insures home loans.”
Where applicable, loan applications with an FHA case number assigned on or after October 1, 2011, will be subject to the new limits–with some exceptions. The press release says those exceptions apply to “FHA-insured to FHA-insured refinances that are noted in HUD’s Mortgagee Letter.”
At the end of the year, loan limits for 2011 will be reviewed as usual for 2012 and any changes will be posted by FHA/HUD in the usual manner.