Great news for those looking to purchase. The FHA loan has always been popular, but it is now becoming more mainstream as its flexibility for low down payments and financed closing costs is understood.

FHA single family loan limits have changed as a result of the American Recovery and Reinvestment Act of 2009 (ARRA) signed into law on February 17th, 2009!

Under ARRA the revised FHA loan limits for 2009 will be set at the higher of the loan limits set for 2008 under the Economic Stimulus Act of 2008 (ESA) or those established for 2009 under the Housing and Economic Recovery Act of 2008 (HERA). These limits are effective for those loans for which credit is approved in calendar year 2009 and will remain in effect until December 31, 2009.

In the Philadelphia Metropolitan Service Area (MSA)(Bucks, Montgomery, Chester, Delaware, Philadelphia),the new limits are as follows:

  • 1 Family     -     $420,000
  • 2 Family     -     $537,650
  • 3 Family     -     $649,900
  • 4 Family     -     $807,700

Please also note that near the top of these ranges, loans may fall into the FHA “jumbo” loan category and may be subject to further restrictions and requirements. For a 1 family property that limit is $417,000. Please contact me if you have specific questions about 2-4 family properties.

The previous limit for a 1 family home was $379,500 so this represents a nice increase for our area. FHA loans only require a 3.5% down payment. There is more flexibility and fewer add-ons than conventional financing and sellers can contribute up to 6% of the sale price toward allowable closing costs. For many, many buyers, FHA financing is the best way to purchase a home.