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FHA Loan Limits Reinstated

Congress has reinstated the loan limit formula and maximum cap for Federal Housing Administration-insured loans through 2013. Those loan limits previously expired September 30. 

The new provision allows loan limits to go back to125 percent of local area median home prices up to a maximum of $729,750 in the highest cost markets through 2013. Loan limits for Fannie Mae- and Freddie Mac-insured mortgages will remain at 115 percent of local area median home prices, up to $625,500. 

These reinstated loan limits will help make mortgages more affordable and accessible for hard-working families throughout the country. In fact, according to FHA, 60 percent of people who used an FHA loan that was higher than the lower loan limits (before the loan limits reverted on October 1) had combined household incomes of below $100,000.

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Separating myth from fact Critics have questioned FHA’s financial strength in the current market, but FHA’s current cash reserves total $33.7 billion – a $400 million increase from a year ago. These reserves are fully capitalized to pay 30 years’ worth of expected claims and losses. For more myths and facts about FHA, visit www.realtor.org/government_affairs/fha_loanlimits_mythfact