The high mortgage loan limits and policies started during the foreclosure worries of 2008 will continue through 2011.
Note: This material is now out of date. Please go to: FHA Loan Limits Rise, Conventional & VA Mortgage Limits Stick.
If you borrow at or below the conventional loan limit for non-government mortgages, you would have what is generally known as a “conforming” loan. If the amount borrowed is above the conventional loan limit, you would have a “jumbo” loan and face a higher rate because larger loans imply more risk to investors, the folks who buy mortgages.
As well, a “conventional” mortgage can be seen as loans originated from the private sector. FHA and VA mortgages are originated in the private sector but insured through government programs. For specifics, look at FHA and VA mortgage requirements.
For 2011 the conventional loan limits depend on the county where you’re located. Instead of one national mortgage limit, we now have one for each county — and there are more than 3200 counties.
In general terms, 2011 loan limits for a single-family home range from $417,000 to $729,750. Once you know the loan limit for a single-family home in a specific area you can then see the limits for owner-occupied homes with two to four units.
Example #1 — Basic Loan limit
One Unit — $417,000
Two Unit — $533,850
Three Unit — $645,300
Four Unit — $801,950
Example #2 — Loan Limit for Certain High-Cost Areas
Two Unit — $934,200
Three Unit — $1,129,250
Four Unit — $1,403,400
Also, in 2011 there are loan limits for so-called “higher cost” areas. In other words, instead of looking at “counties” you can also look at “areas.” These selected areas are located in Arizona, California, Colorado, Connecticut, The District of Columbia, Delaware, Florida, Georgia, Hawaii, Idaho, Massachusetts, Maryland, North Carolina, New Hampshire, New Jersey, New Mexico, Nevada, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Utah, Virginia and West Virginia.
The chart for specific high-cost areas and loan limits can be found at:
Loan Limits for 2009 Mortgage Originations — High-Cost Areas (Remember, the limits for 2011 are the same as 2009)
For 2011 the Department of Veterans Affairs (VA) will use a locality-based approach to establish VA loan limits. Official loan limits for specific areas range from $417,000 to as much as $1,094,625. To find the VA loan limit for a given area, please use the chart below:
Some important points about financing for vets made by the VA:
- Vets can purchase homes with one to four units provided that they live in one unit. The veteran must certify as to occupancy.
- In the case of an active-duty veteran who cannot occupy because of his or her status as an active duty member of the armed forces, occupancy by the spouse can satisfy the occupancy requirement.
The FHA loan program has loan limits for owner-occupied homes under its 203(b) program, the most-common FHA option. The FHA loan limit varies according to whether you live in a typical real estate market, a “high cost” market or in Alaska, Guam, Hawaii, and the Virgin Islands.
For 2011 the FHA loan floor for owner-occupied properties look like this:
One-Unit — $271,050
Two-Unit — $347,000
Three-Unit — $419,400
Four-Unit — $521,250
For 2011 FHA loan limits in higher-cost areas are as follows:
One-Unit — $729,750
Two-Unit — $934,200
Three-Unit — $1,129,250
Four-Unit — $1,403,400
The FHA has special, higher potential loan limits outside the continental U.S. for Alaska, Hawaii, Guam and the Virgin Islands.
One-Unit — $1,094,625
Two-Unit — $1,401,300
Three Unit — $1,693,875
Four-Unit — $2,105,100
To qualify for the FHA loans above, at least one unit must be owner occupied.
HUD has an online database which shows the latest FHA loan limits by state and county. The system can be reached by going to the
FHA-Insured Reverse Mortgages
The loan limits for FHA-insured reverse mortgages (also known as home equity conversion mortgages or HECMs) has been set at $625,500. HUD, in 2010, introduced the HECM Saver program as alternative to its standard HECM plan. The difference? The Saver program has an up-front insurance fee which is less than the cost of take-out food for four but the amount you can borrow against equity has been reduced. For specifics, speak with attorneys who specialize in elder law and fee-only financial planners.
A Brief History
Loan limits used to be set annually and the same limit applied to all states and all counties in the lower 48 states. The limits were 50 percent higher outside the countinental U.S.
The real estate marketplace began withdrawing from the highs seen in April 2007 and price reductions continued into 2008. Given lower home values, conventional loan limits were supposed to be reduced for 2009. At this point the government stepped in and changed the rules with the Economic Stimulus Act of 2008 (ESA) and the Housing and Economic Recovery Act of 2008 (HERA). These laws gave us the loan limit system we have in place today.
For 2011, the Department of State, Foreign Operations, and Related Programs Appropriations Act extends the maximum loan limits first established in 2008.
A CAUTION: Because maximum loan limits can change at anytime, visitors to OurBroker.com are advised to speak with local real estate brokers and lenders BEFORE entering the real estate marketplace for the latest mortgage information.