Last week, HUD announced the FHA loan limits for 2014 with most counties in Washington having loan limits reduced from 2013 levels. In the Seattle/King County area, FHA loan amounts for a single unit dwelling will be reduced by $61,500 from $567,500 to $506,000 in 2014. Kitsap County was hit the hardest with a reduction of $167,950 for single unit dwellings. The higher loan limits that we have appreciated over the past few years were intended to be “temporary” and HUD has been attempting to shrink FHA’s footprint, so we shouldn’t be too surprised over the lower loan limits.
This will go into effect with case numbers issued January 1, 2014 and later. Case numbers are issued once their is a bona fide transaction (typically this requires a complete application for a refinance and purchase and sales agreement with a complete loan application). A case number can be ordered at the end of December with closing in 2014 with the higher 2013 loan limits. If you are buying or refinancing (not using an FHA streamline refi) with an FHA mortgage over the 2014 limits, you will want to confirm with your mortgage originator that your case number has been ordered asap!
Which Washington counties will see the biggest reductions to FHA loan limits in 2014? Here’s a list in order of largest reduction for 1-unit dwellings:
- Kitsap County: $167,950 reduction. 2013 = $475,000 | 2014 =$307,050
- Jefferson County: $115,500 reduction. 2013 = $437,500 | 2014 = $322,000
- San Juan County: $110,750 reduction. 2013 = $593,750 | 2014 = $483,000
- Whatcom County: $70,250 reduction. 2013 = $375,000 | 2014 = $304,750
- Thurston County: $68,000 reduction. 2013 = $362,350 | 2014 = $293,250
- King, Pierce and Snohomish Counties: $61,650 reduction. 2013 = $567,500 | 2014 = $506,000
- Island County: $59,250 reduction. 2013 = $381,250 | 2014 = $322,000
- Skagit County: $58,650 reduction. 2013 = $373,350 | 2014 = $315,100
- Kittitas County: $57,700 reduction. 2013 = $328,750 | 2014= $271,050
- Clark and Skamanie Counties: $56,500 reduction. 2013 = $418,750 | 2014 = $362,250
- Mason County: $38,950 reduction. 2013 = $310,000 | 2014 = $271,050
Conforming loan limits remain at $417,000 (unless you’re in a “high balance” area which provides higher conforming loan amounts). Borrowers with better credit may want to consider a conforming loan instead of FHA depending on what their scenario looks like. Conforming loans do require a 5% down payment UNLESS you are using a program like what is offered by the Washington State Housing Finance Commission such as the Home Advantage Mortgage.
FHA streamline refinances will not be impacted by the reduced loan limits.
If you are buying or refinancing a home anywhere in Washington state, I’m happy to review your options with you.