FHA Loan Limits Restored by U.S. Congress - Good News for Real Estate

That U.S. Congress on November 17, 2011, restored the loan limits for the Federal Housing Administration (FHA) for two years should be good news for real estate.  

FHA, Fannie Mae; and Freddie Mac loan limits were reduced two months ago in 42 states, which priced potential home buyers out of the American Dream of home ownership and holding back the housing recovery.

The National Association of REALTORs® and its leaders worked carefully to get the loan limits restored.  

The reinstated FHA loan limit formula and cap change will help make mortgages more affordable and accessible for families and buyers in 669 counties in 42 states and territories, where the average loan limit reduction after the reset last month was more than $68,000.

The provision reinstated the FHA loan limits through 2013 at 125 percent of local area median home prices, up to a maximum of $729,750 in the highest cost markets, and the floor will remain at $271,050.

However, Congress did not apply the loan limits restoration to Fannie Mae and Freddie Mac, and Fannie and Freddie-backed mortgages will remain at 115 percent of local area median home prices up to $625,500.

This bill also provides for a short-term extension of the National Flood Insurance Program through December 16, 2011. 

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