Local News Release

PERMANENT FHA MORTGAGE LIMITS IN MOST WASHINGTON STATE MARKETS TO RISE 35 PERCENT ON JANUARY 1st
Seattle-Tacoma, Olympia, Vancouver and other "high-cost" market will also see increases

SEATTLE - The U.S. Department of Housing and Urban Development has announced that new, permanent limits on the maximum allowable mortgages that can be insured by the Federal Housing Administration (FHA) will take effect on January 1st, 2009.

This is the first time since January 2007 that permanent FHA limits have been raised nationwide. The new, permanent limits also replace the temporary limits that took effect with passage earlier this year of the Economic Stimulus Act and that are set to expire at the end of 2008.

In most Washington state markets, the new, permanent FHA limit on a one-family house will rise will increase 35 percent to, for example, $271,050 on a one-unit, single-family house. "High cost" markets like Seattle-Tacoma, Clark County, Olympia, Bellingham and the San Juan Islands will also see increases. (see market-specific details below)

Higher-cost markets like the Seattle-Tacoma, Bellingham, Olympia, Vancouver and the San Juan Islands also will see higher limits. The only areas that will see lower FHA limits in January, 2009 than in January, 2008 are Jefferson County and the Bremerton-Kitsap County area.

"Throughout 2008 FHA-insured mortgages have served as a safe and secure harbor for homebuyers seeking refuge from a very stormy mortgage market," said HUD Regional Director John Meyers. "These new limits should insure that FHA remains competitive in the market and responsive to consumers who want to stay away from risky mortgages."

In an otherwise troubled mortgage market, in FHA-insured mortgages has been an increasingly important mortgage products for those who wish to purchase a home or refinance an existing mortgage. Through the first 11 months of calendar 2008, FHA has insured 27,855 mortgages in Washington state – its third best year since FHA's creation in the 1930's – with a total dollar value of almost $6.4 billion.

FHA insurance may be used for mortgages on owner-occupied, one to four-unit residential properties. FHA insurance makes home financing more available to low-income and first time homebuyers. This is because the mortgage is backed by the full faith and credit of the government, freeing lenders from assuming the risk of default. Higher FHA loan limits do not cost the government any money because the FHA Insurance Fund is fully supported by premiums paid by borrowers who receive FHA-insured mortgage loans.

The Housing and Economic Recovery Act pegs the national conforming mortgage loan limit to a house price index chosen by the new Federal Housing Finance Agency (FHFA). For 2009, the national conforming limit will remain at the current level of $417,000.

The Act says that the new FHA loan limits will be set at 115 percent of the median house price in a given area, as determined by HUD, but can not be lower than 65 percent of the conforming loan limit (the national floor). Also, the FHA mortgage limit cannot exceed 150 percent of the national conforming loan limit (the national ceiling).

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.

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