There has been a lot of talk lately about the government allowing Fannie Mae and Freddie Mac to raise their conforming loan limits. I have also heard a lot of speculation that FHA is going to raise their limits as well. Unfortunately I have also been hearing a lot of rumors, lies and complete misinformation being fed to everyone, including buyers, sellers, agents, loan officers and everyone else in this mess, so I wanted to get the actual facts out to everyone.

First, the government is considering (meaning NOT finalized) allowing Fannie Mae and Freddie Mac to raise their conforming loan limits for this year, and this year only, to either $625,000 or $729,750 in high-cost areas. They haven't decided on which limit as of yet, however the deadline for the loans would be December 31, 2008 and not a minute later.

Second, the government is going to raise the FHA limit permanently (if this passes) to $729,750 for Single Family Homes in high-cost areas only. This does not mean that people in an area where the median home price is $175,000 can get a mansion under FHA, even if they qualify financially. It is only for high-cost areas where the median home price is high (above $417,000). As for the FHA Guidelines, the down payment is still going to be 3% and the home will still have to meet FHA requirements.

This is great news, especially for those of us in High-Cost Areas! It is finally going to allow Fannie and Freddie to take on the Jumbo markets, help homeowners re-finance, help buyers get a home, free up funds at the banks and so much more. Now lets hope that Congress will get their butts in gear and get going!