How the 2009 FHA Loan Limits Impact Homeowners

I was so busy sulking about my neck of the woods having the FHA loan limit reduced by $61,500, that I didn’t realize that two Washington State counties (Chelan and Douglas) actually had their limits increased!  Kitsap county has been hit the hardest with a reduction to their FHA loan limit by $167,950. The following comparison is based on single family dwellings for FHA loans:

King, Pierce and Snohomish Counties

2009: $506,000 vs. 2008: $567,500 (reduced by $61,500)

San Juan County

2009: $483,000 vs. 2008: $593,750 (reduced by $110,750)

Clark and Skamania Counties

2009: $362,250 vs. 2008: $418,750 (reduced by $56,500)

Chelan and Douglas Counties

2009: $342,700 vs. 2008: 323,750 (increased by $18,950)

Jefferson County

2009: $322,000 vs. 2008: $437,500 (reduced by $115,500)

Island County

2009: $316,250 vs. 2008: $381,250 (reduced by $65,000)

Kitsap County

2009: $307,050 vs. 2008: $475,000 (reduced by $167,950)

Whatcom County

2009: $304,750 vs. 2008: $375,000 (reduced by $70,250)

Clallam County

2009: $296,700 vs. 2008: $383,750 (reduced by $87,050)

Skagit County

2009: $295,550 vs. 2008: $373,750 (reduced by $78,200)

Thurston County

2009: $293,250 vs. 2008: $361,250 (reduced by $68,000)

What does this mean to you?  Congrats if you’re in Chelan or Douglas counties–you now have more buying or refinancing power should you need an FHA mortgage.  But what if you’re in an area where the FHA loan limit has been decreased?  If you’re considering refinancing beyond 80% loan to value, you should check with your local Mortgage Professional ASAP and make sure they’re HUD approved.  FHA allows up to 95% loan to value for refinances (including cash out if you need to consolidate debt) and is more forgiving on credit scores than conventional.  Some homeowners are surprised to find out they need to use FHA for financing when their home doesn’t appraise as high as they had hoped, bringing their loan to value higher than estimated.   Appraised values used by mortgage companies are based on what other homes (3-4) similar to yours in your neighborhood have sold and closed for within the last 6-12 months.

Start early NOW.  Effective January 1, 2009, odds are in Washington State, you will not be able to finance as much (unless you live in Chelan or Douglas county) and there’s not much time left in 2008.