Focus on Real Estate

Higher FHA and GSE Loan Limits Published

On March 6, 2008, HUD published the new loan limits for FHA and Fannie Mae/Freddie Mac. These new limits were required by the Economic Stimulus Act, signed by President Bush on February 13, 2008.

The new loan limits for FHA and Fannie Mae and Freddie Mac are now calculated at 125 percent of the HUD published median area prices, and are effective through December 31, 2008.

NAR research has indicated that increasing the FHA loan limits will help an additional 138,000 Americans achieve the dream of home ownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home.

In addition, increasing the loan limits for Fannie Mae and Freddie Mac will bolster the housing finance market, which continues to be severely stressed, by providing an immediate infusion of much needed liquidity to the nation's mortgage market.

An economic impact study conducted by NAR in January 2008 estimated that increasing the GSEs' conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000.

In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced, and home prices would be strengthened by two to three percent.

The FHA limits in Franklin, Delaware, Madison, Morrow and Union counties are now: 1-family $341,250; 2-family $436,850; 3-family $528,050; and 4-family $656,250. For Fayette county, the FHA limits are: 1-family $271,050; 2-family $347,000; 3-family $419,400; and 4-family $521,250.

The Fannie/Freddie limits for Franklin, Delaware, Fayette, Madison, Morrow and Union counties CBR serves are: 1-family $417,000; 2- family $533,850; 3-family $645,300; and 4-family $801,950.

For more information and/or to find the limits for additional counties, visit http://www.realtor.org/fha.

New Fannie/Freddie Requirements for Jumbo Loans

Fannie Mae and Freddie Mac have each announced special requirements for the origination, underwriting, delivery, and servicing of jumbo conforming mortgages loans (loans above $417,000 up to $729,750). Both Fannie and Freddie are taking a conservative underwriting approach to the new jumbo conforming mortgages.

Under Fannie's requirements, the maximum loan-to-value ratio (LTV) is 90 percent for fixed rate mortgages (FRMs) and 80 percent for adjustable rate mortgages (ARMs). The minimum FICO score for a primary residence purchase loan is 700 for loans with LTVs of more than 80 percent and 660 for LTVs of 80 percent or less.

Under Freddie's requirements, the maximum LTV is 90 percent for both FRMs and ARMs. The minimum FICO score for a primary residence purchase loan is 700 for LTVs of more than 75 percent and 660 for LTVs of 75 percent or less.

Both GSEs limit jumbo conforming mortgages to one-unit attached or detached dwellings (including condos but excluding manufactured homes). There are many other requirements that apply to these newly eligible jumbo conforming mortgages. For more information, visit http://www.realtor.org/fha.