Economic Stimulous Package

Ok, there seems to be allot of confusion out there.  Everybody keeps asking if FHA loan limits were increased with the Economic Stimulus Act, and if so, by how much?  In the final version the Stimulus Act was signed by President Bush on  February 13^th.  To answer the question, "are FHA limits increased?"  The answer is YES, FHA  maximum loan limits are increased! 

I guess the confusion comes from the fact that there still is allot we don't know.  But there is plenty that we do know, and in my opinion it's great news!  In regards to the single family provision act, here is what we do know: 

• FHA maximum loan limits have been increased.
• The increase is for FHA loans that are approved on or before 12-31-2008.
• $271,050 is the new FHA floor, based on 65% of Freddie Mac current limits.  The previous floor was $200,160 based on 48% of Freddie Mac limits.
• The new limits will be the lesser of:
• 125% of the Area Median Price; or
• $729,750 which is 175% of 2008 Freddie Mac limits.
• HUD has 30 days after enactment to define the Area Median Prices in the Country and publish the new loan limits.

This means that ALL FHA limits will be increased by something! The areas with low median prices will go to $271,050. The areas with high Area Median Prices can go as high as $729,750. But until we know what HUD will use for Area Median Prices, we won't know what any of the exact amounts are.

Personally, I had one deal in particular where the buyers qualifyed for and FHA, but did not for a Regular conventional loan.  The qualify in every single way, no derogs in past 12 months, excelent income, established credit and good debt ratios.  But the credit score was in the low 500's.  The only problem was the house they wanted was $275K.  I had to let them know that it was a no go at former FHA loan limits.  But now, with the new loan limits, I will ahve them closed in about two weeks now.  The Economic Stimulous package is working already.  Turned a no go into an yes go.  They are happy, and to me, thats what makes doing what I do all the more satisying.