When the Housing and Economic Recovery Act of 2008, was signed into law in July, temporary increases in limits for FHA mortgages and conforming jumbo loans (those for more than $417,000) were set to expire after December 31, 2008.
Now Thanks to the legislation, higher limits will be available after December to some home buyers, as follows:
- FHA loans—Starting January 1, 2009, FHA loans will be limited to the greater of $271,050 or 115% of the local-area median home price. However, loans cannot exceed $625,500.
- Conforming loans–These are loans that can be purchased by Fannie Mae and Freddie Mac (the government-sponsored mortgage companies), which carry a lower interest rate than "sub-prime" loans that do not meet the two organizations' guidelines.
Effective January 1, 2009, conforming loans are limited to the higher of $417,000 or 115% of the local-area median home price, not to exceed $625,500