New refinance limits set for FHA mortgages and FHA refinance loans.

Today, HUD announced its new, stable maximum loan limits for FHA Mortgages and FHA Refinance Loans that will become effective on Janurary 1st, 2009. These new maximum loan limits have been set as part of The Housing and Economic Recovery Act of 2008 and will be stable limits.

Under the Housing and Economic Recovery Act of 2008 (HERA) , which passed in July 2008, the Federal Housing Finance Agency (FHFA) was established and directed to set conforming loan limits each year. The policy governing how the loan limits are established fluctuate from the policy set forward in the Economic Stimulus Act of 2008 (ESA), which applies to loans originated in 2008. For example, under ESA, loan limits for high-cost areas were set at 125 percent of Local house price medians and the highest high-cost limit was 175 percent of the national conforming limit ($729,750 in the continental U.S.).

Starting January 1st, the nationalloan limit for one-unit homes in the lower 48 states shall be pegged to a house value index chosen by the FHFA. The national loan limit for 2009 will stay at $417,000. In upcoming years, the fha loan limit for any given area shall be set at 115 percent of the median house in that area, as determined by HUD, except that the FHA finance cutoff in any given cannot exceed 150 percent of the Freddie Mac nationalloan limit, nor be lower than 65 percent of the Freddie Mac nationalloan limit.

This essentially creates the Floor and the Ceiling for the maximum FHA loan amount for a given area with the lowest maximum FHA loan amount being $271,050 in any zone and the highest FHA loan amount being 625,500. Alaska, Hawaii, Guam and the USVI may be adjusted to 150% of these limits to account for higher expenses.

The new FHA mortgage limits for 2009 are detailed below:

In areas where 115 percent of the median house cost is less than 65 percent of the Freddie Mac limit, the FHA limits are set at the 65 percent amount, i.e., the Floor, as follows:

One-Unit $271,050 Two-Unit $347,000 Three-Unit $419,400 Four-Unit $521,250

Any zone where the limits exceed the floor is known as a high costvicinity. In areas where 115 percent of the median house price exceeds the 150 percent figure, the finance limits are set at the 150 percent amount, i.e., the Ceiling, as follows:

One-Unit $625,500 Two-Unit $800,775 Three-Unit $967,950 Four-Unit $1,202,925

For all other areas, i.e., those where 115 percent of the median home for the vicinity is in between the floor and the ceiling, the limit shall be at 115 percent of the median home price.

These new FHA loan limits could mean that the time might be right for you to ponder an FHA refinance loan or an FHA loan for your new home purchase. If you would like more information on FHA mortgage loans or FHA refinance loans, www.fha-101.com.

About The Author Spencer Llewellyn is an FHA lending expert . If you would like more information on FHA Loans or FHA refinance loans, please visit www.fha-101.com. . Visit New mortgage limits set for FHA mortgages and FHA refinance loans..