Of the 3,234 areas in the U.S. where homes for sale can be purchased with FHA loans, 669 areas have been identified by the FHA for reduction of FHA loan limits starting October 1, 2011.
This loan limit reduction was supposed to be implemented in January 2009, but it was delayed by Congress to enable home buyers to take advantage of the reduced prices of high-cost homes and thereby energize the foreclosure-ridden housing market. As a result, the housing market enjoyed higher FHA loan limits for two years and three quarters.
In highest-cost areas, the FHA loan limit of $729,750 for one-unit homes will be reduced to $625,500. For two-unit properties, the loan limit is $800,775 while three-unit properties has a ceiling of $967,950. The highest loan limit is $1,202,925, which is for four-unit properties. In lower-cost areas, the loan limit for one-unit homes will be $271,050 and the limit for two-unit properties will be $347,000.
The exceptions to the loan limit reduction are those for the states of Alaska, Guam, Hawaii and Virgin Islands. This is because of the higher costs of building materials and construction in these states. The loan limits in these areas range from $938,250 for one-unit properties to $1,804,375 for four-unit areas.
From the FHA loan limits, we can also deduce home values and the status of an area’s housing market. In Florida, we can see that the Key West-Marathon area is the most expensive market, as its loan limit for four-unit properties surpasses $1 million.
The Key West, known as the southernmost city in the continental U.S., offers homes for people who want all-year-round great nature views, beach adventures, snorkeling, fishing, diving, dinner cruises, sunset watersports, eco-tours, dolphin encounters, and kayaking, and at the same time be near arts places such as museums, art galleries and historic places.
For single-family homes, the lowest loan limit in Florida counties will be $271,050, and most of the state’s metro areas have this loan limit, including the following:
- Tampa-St. Petersburg-Clearwater
- Lakeland
- Palatka
- Pensacola-Ferry Pass-Brent
- The Villages in Sumter
- Tallahassee
- Deltona-Daytona Beach-Ormond Beach
- Gainesville
- PalmBay-Melbourne-Titusville
The metropolitan areas with higher loan limits for single-family homes are the following, starting from the highest:
- Key West-Marathon — $529,00
- Naples-Marco Island — $448,500
- Fort Lauderdale-Pompano Beach-Deerfield Beach — $345,000
- Miami-Miami Beach-Kendall — $345,000
- West Palm Beach-Boca Raton-Boynton Beach — $345,000
- Port St.Lucie-Fort Pierce — $316,250
- Jacksonville — $304,750
- Orlando-Kissimmee — $274,850
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