You may have heard that things are about to change in the loan limit world! It’s true. Both Conventional (aka “GSE”) and FHA limits will be reduced (if Congress does not step in to change). VA loan limits will not change until at least January 1, 2012.

CONVENTIONAL LOAN LIMITS: What is changing?

In Maricopa County, we will not see a change in Conventional Loan Limits. Our limit is not above the current base limit of $417,000(our limit is $417,000). The base limit is not what is changing for Conventional Loans therefore our Conventional Loan Limit will remain $417,000. What is changing (without an act of Congress) is the way the “high cost” Conventional Loan Limits are calculated in “high cost” areas. See below for the change in the calculation.

FHA LOAN LIMITS: What is changing?

If Congress does not act, we will feel the impact of the pending FHA Loan Limit Changes here in Maricopa County. After October 1, 2011 FHA Loan Limits are set to decrease from the current $346,250 to $271,050 in our County. The reason for the change here is based on the lowest allowed FHA loan limit or the “floor.” By law, the lowest FHA limit allowed in any County is $271,050. Based on our median price, Maricopa County’s FHA limit will revert to the floor of $271,050. “High cost” areas FHA loan limits will be calculated exactly the same way and are currently calculated the same way as the Conventional high cost limits outlined above. Here is how:

HIGH COST AREA (not Maricopa County) LOAN LIMITS
How are they calculated and what is changing?

Pre Oct 1 FHA and Conventional Loan Limit in High Cost Area = Median Home Price x 125%
Post Oct 1 FHA and Conventional Loan Limit in High Cost Area = Median Home Price x 115%

*national “ceiling” loan limit would drop from $729,750 to $625,500 for FHA and Conventional