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The FHA loan limit will revert back to previous loan limits of 2008 for all loans insured by FHA on or after October 1, 2011. The Federal Housing Administration (FHA) temporarily increased the FHA loan limits under the Housing and Economic Recovery Act (HERA) to help speed the recovery and stabilization of the United State housing market. Congress has already extended the effects of this act through the Continuing Appropriations Act which allowed the FHA to insure mortgage to the higher limits. Since many private lenders and banks reduced their mortgage limits to avoid large losses, the largest Federally Insured mortgage program stepped up to fill the gap.
The increase in loan limits were set by congress through the nations Economic Stimulus Act (ESA) enacted in February 2008 which bumped the FHA loan limits to 125 percent of the median house price in the area from the previous limit of 95 percent. The Stimulus Act however required that FHA loan limits could not exceed 175 percent of the 2008 conforming mortgage limit of $417,000 unless it was in a high cost area such as Alaska, Guam, Hawaii, and the Virgin Islands which can be adjusted up to 150 percent of the national limit. Once the Continuing Appropriations Act expires, FHA loan limits will be reduced to previous levels starting Oct. 1, 2011.
By lowering the FHA loan limits, 669 of the 3,334 counties that are eligible for FHA mortgages will be affected which 2,665 counties will remain unchanged. In Michigan, 12 counties will be affected by the FHA loan limit change including Berrien County, Kalamazoo County, Lenawee County, Lenawee County, Livingston County, Macomb County, Monroe County, Oakland County, St. Clair County, Van Buren County, Washtenaw County and Wayne County. All FHA loan limits in Michigan will be reduced to the previous HERA FHA loan limits of $271,050.
Related: 2019 Conventional Loan Limits in Michigan
Michigan FHA loan Limits by County
FHA Loan Limits for Berrien County MI was $ 298,750 and is being reduced to $ 271,050 a change of -$27,700.
FHA Loan Limits for Kalamazoo County MI was $ 286,250 and is being reduced to $ 271,050 a change of -$15,200.
FHA Loan Limits for Lapeer County MI was $ 297,500 and is being reduced to $ 271,050 a change of -$26,450.
FHA Loan Limits for Lenawee County MI was $ 297,500 and is being reduced to $ 271,050 a change of -$26,450.
FHA Loan Limits for Livingston County MI was $ 297,500 and is being reduced to $ 271,050 a change of -$26,450.
FHA Loan Limits for Macomb County MI was $ 297,500 and is being reduced to $ 271,050 a change of -$26,450.
FHA Loan Limits for Monroe County MI was $ 297,500 and is being reduced to $ 271,050 a change of -$26,450.
FHA Loan Limits for Oakland County MI was $ 297,500 and is being reduced to $ 271,050 a change of -$26,450.
FHA Loan Limits for St. Clair County MI was $ 297,500 and is being reduced to $ 271,050 a change of -$26,450.
FHA Loan Limits for Van Buren County MI was $ 286,250 and is being reduced to $ 271,050 a change of -$15,200.
FHA Loan Limits for Washtenaw County MI was $ 345,000 and is being reduced to $ 271,050 a change of -$73,950.
FHA Loan Limits for Wayne County MI was $ 297,500 and is being reduced to $ 271,050 a change of -$26,450.
How will the change in loan limits affect my FHA Mortgage?
Most lenders are requiring that you close your loan a large amount of time prior to FHA’s October 1st deadline to reduce FHA loan limits. This will allow them time to request FHA insurance for these mortgages. If you have a pending refinance or home purchase be sure to speak with your loan officer in regard to how their bank and investors are handling these FHA loan limit changes. Once your loan is funded your mortgage will not be affected by upcoming changes. If your loan does not fund in time to comply with the reduction of FHA’s loan limits your loan will not be funded and you may be in jeopardy of getting financing.
Alternatives to getting financed after the FHA mortgage limit reduction include bringing additional cash to close on your loan or seeking alternate financing such as a conventional mortgage. The national conventional mortgage limit remains at $417,000 which is far above the federally insured loan limits. Speak with your loan officer about the benefits and downsides to conventional financing vs. FHA mortgages as conventional loans may not be an option for your situation.
For more information regarding changes to FHA Loan Limits visit HUD’s publication for FHA mortgage limits.
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