2010 FHA Loan Limits for Connecticut - Just How Much Can You Borrow with less than a 5% Down Payment?
There are fewer than 36 hours left until 2010, so it's time to start thinking about some of the changes we'll see in mortgages in the New Year. One aspect of lending that changes eery year is the amount that can be borrowed using the government's Federal Housing Administration (FHA) insurance program. Each county across the country is given a different amount based on average home prices within that county.
For 2010, as 2009, certain counties have received higher than normal FHA loan limits. This temporary program was a government response to the collapse of the Jumbo loan market in an effort to allow home transfers to continue to transact in counties where the median home price significantly exceeded the national average.
The base US maximum loan amount for FHA transactions is $271,050 for all counties, but certain counties, including all of Connecticut, are allowed to exceed this limit.This base limit, or "floor", as FHA defines it, is based on the conforming loan limit, $417,000, used by Freddie Mac and Fannie Mae for the past few years, times 65%. We can call this the "minimum maximum".
Beyond this, counties with higher-than-average housing prices are allowed higher loan amounts. In 2009, this was based on an amount up to 175% of the conforming limit, or $729,750, depending on median home prices in that county. For 2010, though, the cap on this increased balance program has been reduced to 150% of the conforming loan limit, or $625,500. Essentially, the goal is to make FHA financing available on about three-quarters of the homes sold in any given county. This reduction should be invisible for most home buyers, however, buyers in Fairfield County may find it difficult to obtain FHA finacing above this amount, even though that county's limit is higher.
The Connecticut limits for FHA financing for 2010 are as follows:
Fairfield County: $708,750
Hartford County: $440,000
Litchfield County: $375,000
Middlesex County: $440,000
New Haven County: $387,500
New London County: $398,750
Tolland County: $440,000
Windham County: $272,500
Note that for 2010, these figures are unchanged from 2009.
All loans that are submitted to FHA are eligible for this financing provided the amount of the propesed loan doesn't exceed the limit above for the respective county. Loans that exceed the conforming limit of $417,000 may require payment of an additional fee, or may charge a slightly higher rate, than loans at $417,000 and below. From what I have seen lately, most lenders are charging a fee of about 1 point upfront, or .25% difference in interest rate.
Feel free to contact me if you have any questions about using FHA financing to purchase your new home in any of Connecticut's counties for 2010! You may contact me by commenting on this blog, or here.
Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates and has 10 years experience in home financing. He is available by mobile phone at (401) 263-8655.
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