FHA Loan Max Dropped

The limit on loans that Fannie Mae and Freddie Mac can guarantee dropped to $625,500 on October 1st. This mostly affects the upper end housing in the US. FHA loan limits vary based upon the area median home prices, but they fall within a range of $271,050 and $625,000.

Those homebuyers wanting to purchase a home in the upper-cost housing markets will face larger mortgage rates, higher down payments and stricter loan qualifications. Therefore resulting in higher interest rates and down payments.

By the end of the year, loan limits will be reviewed for 2012 and certain counties will see dramatic drops in their loan limits.