FHA mortgages' high cost loan limits have been restored. FHA loans in high-cost areas had previously been allowed at up to 125% percent of the median home price for individual counties, with the maximum loan being $729,950. In September, those limits were temporarily reduced as Congress failed to renew the temporarily-increased limits. Maximum loans were reduced to $625,500 and 115% of the median as a result, affecting a large number of markets in larger cities with higher costs of living.
Congress's passage of the new bill, along with the President's signature, assures a consistent lending market for the near future, a key to strengthening a real estate recovery. While conventional loan limits are still at $625,500, there is a good chance that they too could be increased, matching the FHA limits. The National Association of Realtors has been pushing consistently for the enactments of these measures to reassure home buyers in some of the country's largest markets that financing will still be available in their areas.
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