Buyers of new residential homes may want to race to complete deals as FHA loan limits are set to drop around the nation. According to an analysis by the FHA, loan limits on government-insured mortgages are likely to decline in 669 of the 3,334 counties or county equivalents when the ceilings revert back to the levels determined under the Housing and Economic Recovery Act of 2008.
Unless Congress says otherwise, the shift will take place on Oct. 1.
That’s almost three times as many markets that will be affected when it comes to loans that conform to the limits placed on Fannie-Freddie loans. According to an earlier analysis by the Federal Housing Finance Agency, only 250 county or county-equivalent areas—a “small fraction” of the total, the FHFA said—will be affected by the pending change.
The FHA analysis shows that its loan limit would fall by more than 5% in eight states—Arizona, California, Colorado, Connecticut, Massachusetts, Maine, New Hampshire and Oregon—as well as the District of Columbia.
When evaluated for the potential impact on the number of loans eligible for government insurance, Colorado, Maine and Oregon fall off the list and Nevada and Puerto Rico come on.
A total of 44 Puerto Rican municipalities would feel the greatest pinch, with a projected decline in the FHA loan limit of a whopping $221,000. But that would only impact 4% of those areas’ loan count, the FHA analysis says
Other places would take big hits, too. The limit is projected to fall by $75,200 in Maricopa County, Ariz., from $346,250 to $271,050. Phoenix is in Maricopa County.
In Los Angeles County, the lid would drop $104,250, from $729,750 to $625,500. But in Mendocino and San Joaquin counties in California, it would sink by $138,750 and $184,000, respectively. more