On November 18, 2011, the President signed into lawthe Consolidated and Further Continuing Appropriations Act 2012.This lawre-establishes the higherFHA loan limits in high-cost areas which expiredOctober 1 of this year.Previously, theEconomic Stimulus Act of 2008 set higher limits for conforming and FHA loans in high cost areas because of limited availability of jumbo mortgages in the wake of the financial crisis.

Why is this important topresent and prospective homeowners? In higher cost areas, while jumbo mortgages are now available again, they are not available with the low rates and low down payment requirements of FHA mortgages. For example, many jumbo programs require a 20%down paymentand FHA only requires a 3.5% down payment. That is quite a difference for those whose mortgages are over thepresent conforming high-costlimit of $625,500. The extended FHA high-cost limitsgo up to$729,750.

FHA is available for both purchasing a home and refinancing your present home. You must live in the property you purchase if you are using FHA. If you are thinking about purchasing a homeor refinancing and you want to know if the new extended FHA loan limits could help you, please contact us.