H.R. 3081: Department of State, Foreign Operations, and Related Programs Appropriations Act, 2010 was passed in the Senate on September 29, 2010. Because it passed in identical form in the House of Representatives previously, it was delivered to President Obama on September 30, 2010 and awaits his signature before becoming law.
This legislation means that the previous Federal Housing Administration (FHA) loan limits will remain in effect until September 30, 2011.
Current FHA Loan Limits
Currently, the loan limits are set at 125 percent of local median home sales prices up to some maximum. In the high-cost areas, the existing FHA loan limits can go as high as $729,750 for single-family residential mortgages. Outside of high-cost areas, the maximum loan amount for a single-family residential home is $271,050.
The Controversy Over High FHA Loan Limits
There has been fear that 125% of medium home sales prices is just too high of an FHA loan limit and might create another housing bubble that could burst. But the Federal government felt they had no choice but to approve them.
Without these high FHA loan limits (especially in high-cost areas) consumers in a lot of cases would have virtually no source for financing home purchase. The Fed’s fear is that with credit markets still tight, the already fragile housing market might be hurt even more without FHA-insured mortgages being available in high-cost areas as a substitute for traditional jumbo mortgages. This could further slow the recovery of the housing market.
Additional FHA Funding
H.R. 3081 also included $20 billion in appropriations for the General and Special Risk Insurance Funds so the FHA can continue insuring loans though the end of 2010.
