FHA Loan Limits in DC Metro Area to Return to $729,750

Good news for our area: FHA is on its way to increasing their loan limit from $625,500 to $729,750 (its ‘temporary’ level prior to October 1, 2011). The measure would be in place through 2013.

According to Reuters, a bipartisan panel of Congress agreed on a measure yesterday that would increase the limit. The increase would apply only to FHA, NOT to loans backed by Fannie and Freddie. It still has to pass the House & Senate, but indications of passing are good.

This is important for our local market, which is considered high priced. When loan limits dropped to $625,500, it meant less purchasing power for buyers trying to borrow more. This primarily affected homes in the $750-900k price range, which, after the drop meant that even with 20% down, in order to get the very best rates buyers were limited to homes under $750k (unless they came up with more cash.) At the new $729k limit, buyers can purchase up to about $875k with 20% down and still get extremely competitive (historical lows, actually) interest rates.

Stay tuned to see if the measure passes.


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