Good News For Home Buyers

Current loan limits for an FHA insured mortgage are 115% of an area's median home price, not to exceed $625,500. When the new Housing Bill takes effect, this loan limit will become permanent.

Fannie Mae and Freddie Mac loan limits will remain at $417,000 for this year. In 2009, the loan limits will reflect those of FHA with an increase in higher-cost areas to 115% of the area's median home price.

It is important that you note the loan limits are based on an area's median home price, which means that loan limits will be determined by locale. FHA will not insure any mortgage for more than $625,500 no matter what area the property is located in. Loan limits for Fannie Mae and Freddie Mac will range from $417,000 to $625,500 depending on area.

For Anchorage, Alaska, the loan limit is and will remain at $347,000 for a single family home. A single family home is defined as a home designed to house one family. This definition includes condos and town-homes.

FHA will allow a buyer to purchase a multi-unit home (up to four units) as long as the homeowner occupies one of the units. Loan limits for these properties are higher than those for single family defined homes.

Since Fannie Mae and Freddie Mac seem to be reflecting the FHA loan limits, it is safe to say that the loan limits for Anchorage will be the same as FHA ($347,000).

This does not mean that a buyer will not be able to finance a home that is selling for more than $347,000. The loan limit is not the sales price, but the amount the buyer is financing. The price of the home would be determined by the amount of the loan and the addition of a buyer's down payment. Buyers can also apply for a "jumbo" loan if the loan amount exceeds the loan limit for the area. Jumbo loans have different guidelines, so you would need to consult with a mortgage lender who deals in these types of loans.

Contact an FHA approved lender to learn about FHA guidelines and for pre-approval.

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