FHA 2010 loan Limits

As they do about this same time each year, HUD has announced FHA mortgage limits for 2010 with Mortgagee Letter 2009-50.

First, we all know by now that the conforming loan limit will remain at $417000. That in itself means little change for maximum mortgage limits. However, HUD allows any interested party to submit a request for a higher county limit to the Homeownership Center that serves jurisdiction over the area in question if one is under the opinion that the mortgage limit set forth doesn’t serve the area’s true market. The request must be accompanied by reliable housing price data provided by a local taxing authority, title company, or real estate data company. Specific details on the data requirements can be found within Mortgagee Letter 2007-01. Upon receipt of the request, the HOC will review the request for compliance within Departmental requirements, will verify the housing sales data and if revise the limit if it is deemed appropriate.

In most cases, maximum mortgage limits are determined by county. But there are also mortgage limits assigned to metropolitan statistical areas (MSA) and micropolitan areas. A metropolitan area has at least one urban area with a population of 50,000 or greater and an urban core that exerts economic influence on the surrounding territory as measured by commuting patterns. A micropolitan area contains a small urban center population between 10,000 and 49,999 where commuting patterns are also taken into account to determine overall economic influence. Micropolitan areas can be populated regions without large cores but metropolitan areas generally consist of large cores and may or may not be surrounded by additional population.

Metropolitan statistical areas (MSA) and micropolitan areas often overlap into more than one county. The mortgage limits in these areas are set based on the county with the highest median price within the metropolitan or micropolitan area.

The FHA maximum mortgage limits for 2010 consist of the higher of the loan limit established under the Economic Stimulus Act of 2008 (ESA) or the regular limits established under section 203(b) which was amended by the Housing and Economic Recovery Act (HERA).

Floor Limits-Low Cost Areas

These area loan limits are calculated at 65 percent of the conforming loan limit according to both ESA-2008 and HERA-2010 and since the conforming loan limit remains the same, so do the FHA floor limits for low cost areas:

- One Unit $271,050
- Two Unit $347,000
- Three Unit $419,400
- Four Unit $521.250

Ceiling Limits-High Cost Areas

Because the calculation of maximum mortgage is higher with The Economic Stimulus Act of 2008 (ESA) than it was in the Housing and Economic Recovery Act (HERA), ESA calculations prevail for high cost areas where the loan limits exceed the floor limit.

- One Unit $729,750
- Two Unit $934,200
- Three Unit $1.129.250
- Four Unit $1,403,400

However, if the area did not have loan limits as high as stated by ESA in 2008, the area will not be eligible for the highest ESA loan limits.

Loan Limits for AL, HI, Guam and U.S. Virgin Islands

The National Housing Act permits these areas to adjust up to 150 percent of the regular national ceiling limits so loan limits in these areas can be as high as:

- One Unit $1,094,625
- Two Unit $1,401,300
- Three Unit $1,693,875
- Four Unit $2,105,100

Between the Floor and Ceiling

Dependent upon the median home price calculations in the area, many area loan limits fall between the floor and ceiling limits as determined by the higher of the calculation allowed by Esa-2008 or HERA-2010. These areas reflect single unit loan limits ranging from 271,400 to as high as 716,250.

If you are like me, much of this doesn’t make much sense at first read but I highly recommend referring to the following additional resources which will explain further to help you become more comfortable in understanding federal max mortgage limits and their determinations: