Time to Buy! FHA Loan Limits Increase!

For those waiting for the perfect time to buy, now may be the time to jump off the fence. Last month, we saw prices begin to stablilize in Long Beach and Lakewood. This month, we've seen the pace of sales pick up locally. And by now, anyone interested in buying has probably heard the big news -- FHA loan limits were increased.

Beginning today, HUD will offer temporary FHA loan limits ranging from $271,050 to $729,750. Both Los Angeles and Orange County qualify for the highest limit based on median prices here.

""Many families all over the U.S. will benefit from this access to credit, and increasing these loan limits will inject much-needed liquidity into the housing market," FHA Commissioner/Assistant Secretary for Housing Brian Montgomery was quoted as saying.

The change was benefit of The Economic Stimulus Act of 2008, which permits FHA to insure loans on amounts up to 125 percent of the area median house price, when that amount is between the national minimum ($271,050) and maximum ($729,750). The new minimum and maximum loan limits are based on 65 percent and 175 percent of the conforming loan limits for Government-Sponsored Enterprises in 2008, which is $417,000. The FHA used a combination of existing government data sets and available commercial information to determine the median sales price for each area, and released the data approximately two weeks after the President signed the stimulus bill. The change in loan limits are applicable to all FHA-insured mortgage loans endorsed after HUD publishes the increased loan limits today, and it lasts until December 31, 2008.

By increasing loan limits nationwide, FHA hopes to help stabilize housing markets across the country. In January 2009, FHA's maximum loan limit will return to $362,790, unless the U.S. Congress approves bipartisan legislation to permanently increase loan limits as part of the FHA Modernization bill, which is still awaiting final approval on Capitol Hill.

LONG BEACH REAL ESTATE