PRESIDENT’S ECONOMIC RECOVERY PACKAGE TO MAKE MORE FAMILIES ELIGIBLE FOR FHA-INSURED MORTGAGES
FHA implements temporary higher loan limits in Seattle, Tacoma, Olympia, Vancouver Bellingham, Bremerton, Tri-City and other areas to help families keep their homes
WASHINGTON – More American families will be eligible this year to purchase or refinance their homes using affordable, FHA-insured mortgages, thanks to the economic stimulus package signed into law by President Obama on Tuesday. The American Recovery and Reinvestment Act of 2009 will allow HUD’s Federal Housing Administration (FHA) to temporarily increase its loan limits and insure larger mortgages at a more affordable price in high cost areas of the country.
“This is one of many elements in the President’s stimulus package that will aid homeowners and homebuyers in dealing with the volatile mortgage market,” said HUD Secretary Shaun Donovan. “These loan limit increases will help FHA continue to provide safe, affordable mortgage products to families in all areas of the nation.”
Effective immediately, HUD will offer temporary FHA loan limits that will range from $271,050 to $729,750. The maximum amount of $729,750 will only be applicable to extremely high-cost metropolitan areas such as: New York, Los Angeles, San Francisco and Washington, D.C.
In Washington State, today’s announcement will affect loan limits in the following communities:
- In most Washington markets – including Spokane, Yakima, Walla Walla, Wenatchee and Ellensburg. – the FHA mortgage limits that took effect on January 1st, 2009 will remain in effect – on a one-family home the limit is $271,050; on a two-unit home is $347,000; on a three-unit house is $419,400; and on a four-unit house is $521,250. The higher limits also apply to cities like
- In the Seattle-Tacoma area which includes Bellevue, Everett, Seattle, Tacoma ands and King, Pierce and Snohomish counties, the FHA limit on a one-unit house will be $567,500; on a two-unit house will be $726,500; on a three-unit house will be $878,150; and on a four-unit house will be $1,091,350.
- In Bellingham and Whatcom County, the FHA limit on a one-unit house will be $375,000; on a two-unit house will be $480,050; on a three-unit house will be $580,300; and on a four-unit house will be $721,150.
- In Olympia and Thurston County, the FHA limit on a one-unit house will be $361,250; on a two-unit house will be $462,450; on a three-unit house will be $559,000; and on a four-unit house will be $694,700.
- In Vancouver and Clark and Skamania counties, the FHA limit on a one-unit house will be $418,750; on a two-unit house will be $536,050; on a three-unit house will be $648,000 ; and on a four-unit house will be$805,300.
- In Kennewick, Pasco, Richland and Benton and Franklin counties, the FHA limit on a one-unit house will be $275,000; on a two-unit house will be $352,050; on a three-unit house will be $425,550; and on a four-unit house will be $528,850.
- In the Bremerton-Kitsap County area, the FHA limit on a one-unit house will be $475,000; on a two-unit house will be $608,100; on a three-unit house will be $735,050; and on a four-unit house will be $913,450.
- In Port Angeles and Clallam County, the FHA limit on a one-unit house will be $383,750 ; on a two-unit house will be $491,250; on a three-unit house will be $593,800; and on a four-unit house will be $738,000.
- In Skagit County, the FHA limit on a one-unit house will be $373,750; on a two-unit house will be $478,450; on a three-unit house will be $578,350 ; and on a four-unit house will be $718,750.
- In the San Juan Islands, the FHA limit on a one-unit house will be $593,750; on a two-unit house will be $760,100; on a three-unit house will be $918,800; and on a four-unit house will be $1,141,850.
- In Jefferson Count, the FHA limit on a one-unit house will be $437,500; on a two-unit house will be $560,050; on a three-unit house will be $677,000; and on a four-unit house will be $841,350.
Under the American Recovery and Reinvestment Act of 2009, the revised FHA limits for 2009 are set at the higher of the loan limits established for 2008 under the Economic Stimulus Act of 2008 and those established for 2009 under the Housing and Economic Recovery Act of 2008. Thus the new Act permits FHA to insure loans on amounts up to 125 percent of the 2007 area median house prices, when that amount is between a national minimum of $271,050 and maximum of $729,750.
The change in loan limits are applicable to all FHA-insured mortgage loans endorsed after HUD publishes the increased loan limits today, and it lasts until December 31, 2009.
Increasing loan limits will help FHA continue to provide much stability to housing markets across the country. Already, as conventional sources of mortgage credit have been contracting, FHA has been filling the void. From September to December 2008, FHA facilitated $97 billion of much-needed mortgage activity in the housing market, $35 billion of which was through FHA’s refinancing products. By focusing on 30-year fixed rate mortgages, FHA helps homeowners avoid and escape the risks associated exotic subprime mortgage products, which have resulted in rising default and foreclosure rates.
In January 2010, FHA’s maximum loan limit will return to 150 percent of the conforming loan limit. That amount will likely be $625,500, unless Congress approves additional changes.
Home Equity Conversion Mortgages
FHA’s reverse mortgage product known as the Home Equity Conversion Mortgage (HECM) will have a new national mortgage limit of $625,500, up from the previous limit of high of $417,000. As in previous years, the special exception areas of Alaska, Hawaii, Guam, and the Virgin Islands may have higher loan limits.
Reverse mortgages allow homeowners age 62 and older to borrow against the value of their homes without selling them or having to make any monthly repayments. Homeowners can select a lump-sum payment, monthly payments or tap into a line of credit. No repayment is required as long as a homeowner lives in a home with a reverse mortgage. The reverse mortgage is repaid, with interest, when a homeowner sells the home or dies.
FHA loan limits are based on the county in which the property is located. However, for properties located in metropolitan or micropolitan statistical areas, the limit is set at that of the county with the highest median home price within the metropolitan or micropolitan area.
The new temporary FHA loan limits are posted on the HUD website. Additional details on these new temporary loan limits, including FHA’s mortgagee letter and attachments.
Last Updated on September 2, 2019 by Chuck Marunde
