Working in concert to meet a tight deadline,Congress and the White House have raised the FHA loan limit in high-cost real estate markets, making it easier to obtain an FHA loan on properties up to $729,750*.
Following passing votesin the House of Representatives and Senate, President Obama signed HR 2112, the Consolidated and Further Continuing Appropriations Act of 2012, into law, renewing the expired higher loan limits for Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loans for an additional two years, through December 31, 2013.
The limit to conforming loanswas reduced to $625,500 on October 1, 2011, when a previous increase in conforming loan limits expired. With the passage of this legislation, the FHA loan limit has been restored to $729,750. While the loan limit has been increased for FHA loans, the increase does not affect limits for conventional loans backed by Fannie Mae or Freddie Mac.
Higher loan limits give borrowersanother home-financing option to consider in high-cost areas of the country, such as California and New York. Borrowers could take out a jumbo loan, which typically requires a larger down payment. They now have the option of using an FHA loan with a lower 3.5% down payment requirement.
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