Mortgage Loan Limits for Conventional, FHA and VA

The mortgage loan limits and policies established in 2008 and 2009 will continue through 2010.

There are several types of mortgage loan limits. Generally, most borrowers need to look at conventional, FHA and VA loan limits to see how much can be financed with the most-widely originated loans.

If you borrow at or below the conventional loan limit for non-government mortgages, you would have what is generally known as a “conforming” loan. If the amount borrowed is above the conventional loan limit, you would have a “jumbo” loan and face a higher rate because larger loans imply more risk to real estate investors, the folks who buy mortgages.

Conventional Loans

For 2010 the conventional loan limits depend on the county where you’re located. Instead of one national mortgage limit, we now have one for each county – and there are more than 3,200 counties.

In general terms, 2010 loan limits for a single-family home range from $417,000 to $729,750. Once you know the loan limit for a single-family home in a specific area you can then see the limits for owner-occupied homes with two to four units.

Example #1: Basic Loan Limits

One Unit – $417,000
Two Unit – $533,850
Three Unit – $645,300
Four Unit – $801,950

Example #2: Loan Limits for Certain High-Cost Areas

One Unit – $729,750
Two Unit – $934,200
Three Unit – $1,129,250
Four Unit – $1,403,400

Also, in 2010 there are loan limits for so-called "higher cost" areas. In other words, instead of looking at "counties" you can also look at "areas." These selected areas are located in Arizona, California, Colorado, Connecticut, The District of Columbia, Delaware, Florida, Georgia, Hawaii, Idaho, Massachusetts, Maryland, North Carolina, New Hampshire, New Jersey, New Mexico, Nevada, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Utah, Virginia and West Virginia.

The chart for specific high-cost areas and loan limits can be found at:

Loan Limits for 2009 Mortgage Originations – High-Cost Areas (Remember, the limits for 2010 are the same as 2009.)

FHA Loans

The FHA loan program has loan limits for owner-occupied homes under its 203(b) program, the most-common FHA option. The FHA loan limit varies according to whether you live in a typical real estate market, a “high cost” market or in Alaska, Guam, Hawaii, and the U.S. Virgin Islands.

For 2010 the FHA loan floor for owner-occupied properties look like this:

One Unit – $271,050
Two Unit – $347,000
Three Unit – $419,400
Four Unit – $521,250

For 2010, FHA loan limits in higher-cost areas are as follows:

One Unit – $729,750
Two Unit – $934,200
Three Unit – $1,129,250
Four Unit – $1,403,400

The FHA has special, higher potential loan limits outside the continental U.S. for Alaska, Hawaii, Guam and the Virgin Islands:

One Unit – $1,094,625
Two Unit – $1,401,300
Three Unit – $1,693,875
Four Unit – $2,105,100

To qualify for the FHA loans above, at least one unit must be owner occupied.

HUD has an online database which shows the latest FHA loan limits by state and county. The system can be reached by going to the FHA Loan Limits page.

FHA-Insured Reverse Mortgages

The loan limits for FHA-insured reverse mortgages (also known as home equity conversion mortgages or HECMs) has been set at $625,500.

VA Loans

For 2009 the Department of Veterans Affairs (VA) will use a locality-based approach to establish VA loan limits. Official loan limits for specific areas range from $417,000 to as much as $1,094,625. To find the VA loan limit for a given area, please use the chart below:

2009 VA County Loan Limits for High-Cost Counties

Some important points about financing for vets made by the VA:

• Vets can purchase homes with one to four units provided that they live in one unit. The veteran must certify as to occupancy.
• In the case of an active-duty veteran who cannot occupy because of his or her status as an active duty member of the armed forces, occupancy by the spouse can satisfy the occupancy requirement.

A Brief History

Loan limits used to be set annually and the same limit applied to all states and all counties in the lower 48 states. The limits were 50 percent higher outside the continental U.S.

The real estate marketplace began withdrawing from the highs seen in April 2007 and price reductions continued into 2008. Given lower home values, conventional loan limits were supposed to be reduced for 2009. At this point the government stepped in and changed the rules with the Economic Stimulus Act of 2008 (ESA) and the Housing and Economic Recovery Act of 2008 (HERA). These laws gave us the loan limit system we have in place today.

In 2009 a Congressional Continuing Resolution (Public Law Number 111-88) extended the maximum loan limits seen during 2009.

NOTE: Because maximum loan limits can change at anytime, investors are advised to speak with local real estate brokers and lenders for the latest mortgage information BEFORE investing in real estate.