PMC Mortgage Lender's Blog

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 loan limits will only be in effect for a short period of time, October 1, 2011 through December 31, 2011, before HUD implements new maximum mortgage amounts for calendar year 2012. That announcement for 2012 is expected in November 2011.

Absent any authorizing legislation by Congress, Realtors with expected or pending contracts with FHA borrowers should be aware that new, lower loan limits will be implemented on October 1, 2011 for the Seattle-Bellevue-Everett, WA Metropolitan MSA (King and Snohomish Counties).

The chart above is an example of the reduction in loan limits which vary for each high cost area across the nation. FHA has provided an easy lookup tool on their web site to determine if a property’s loan limit is affected by its location. HUD Lookup Tool.

The FHA ceiling loan limits will also be reduced to $625,500, $800,775, $967,950 and 1,202,925 for 1-, 2-, 3- and 4-unit dwellings, respectively.

HUD is not updating median prices at this time and there is no appeal period associated with the change of loan limits for October 1, 2011.

The current Upfront Guarantee Fee structure for USDA rural housing loans will end on September 30, 2011.

For all conditional commitments issued on or after October 1, 2011, the Upfront Guarantee Fee will be reduced from 3.5% to 2.0% for purchase transactions. There is no change in the Guarantee Fee for USDA-RD refinance transactions.

USDA will be adding an Annual Fee of 0.30% of the outstanding principal balance for the life of the loan for all transactions.