Stimulus Package with GSE and FHA Loan Limit Increases Goes to the President

On February 13, 2008, President Bush signed the economic stimulus package into law. The economic stimulus package includes several important housing provisions, including increases in the loan limits for Fannie Mae and Freddie Mac and also FHA. Included in the package are:

• The FHA limit will increase to as much as $729,750 in high cost areas (to 125% of local median home prices) for loans approved on or before December 31, 2008. In addition, the measure gives the Secretary of HUD the discretion to raise any individual area loan limit by an amount not to exceed $100,000.
• The GSE limit will be increased up to $729,750 for loans originated after July 1, 2007 to December 31, 2008. Currently Fannie Mae and Freddie Mac are capped at $417,000. It appears the formula mirror that used by FHA, with GSE loan limits increasing to 125% of the local median home price, but not to exceed $729,750.
  
  NAR developed these estimates of the temporary FHA and GSE single-family loan limits based on the U.S. Department of Housing and Urban Development’s (HUD) existing FHA loan limits as of January 31, 2008. Per the economic stimulus measure, HUD is required to publish the official new temporary loan limits within 30 days of enactment. These are estimates, not official figures.
  
  NOTE: If you are from a very high cost area, you may find an asterisk instead of a new loan limit estimate for your county.
  
  This reason for this is that your current FHA loan limit for every property type (1-4 units) is currently at the existing FHA loan limit. These estimates are generated using a formula that is based on the loan limit in your county. If your loan limits are at the maximum in all categories, the formula does not allow us to estimate the median home price. Without an estimate of the median home price used by FHA, our formula will not allow us to calculate an estimated new maximum limit.
  
  If you are from a high cost area, and you know your county's median home price, you could generate a very rough estimate of what your new loan limit may be by multiplying the county median home price by 1.25. Please keep in mind that the maximum loan limit will be capped at $729,750.
  
  NAR's Existing Home Sales data is based on Metropolitan Statistical Areas (MSA) and cannot be used to estimate the loan limit. HUD uses county-level data to calculate their loan limits.
  
  
  
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