FHA Changed Its Loan Limits–Are VA Loan Limits Affected?
Recently in the Federal Housing Administration released a statement announcing a lower loan limit for high-cost counties in the most expensive markets.
According to a Friday, August 19, 2011 press release, “On October 1, 2011, the Federal Housing Administration (FHA) will implement new single-family loan limits as specified by the Housing and Economic Recovery Act of 2008 (HERA). As a result, FHA will reduce loan limits in the highest cost metropolitan areas of the country while limits would remain unchanged in most other parts of the nation.”
These loan limits, scheduled to start in January 2009, were delayed until recently due to what the FHA describes as “continuing strains in credit markets”.
Congress delayed the new FHA loan limits from taking effect for nearly three years via the Economic Stimulus Act of 2008. But those limits have finally changed, and those lower numbers lead some to speculate that the Department of Veterans Affairs might follow suit for the remainder of 2011 with lower loan limits for the highest-cost counties.
But the Department of Veterans Affairs is not changing the VA loan limit for the rest of the year. It issued a statement on the VA official site stating such. According to the VA, “The maximum guaranty for VA guaranteed loans closed October 1, 2011 through December 31, 2011 will remain unchanged. The Veterans’ Benefits Improvement Act of 2008 provided a temporary increase in VA loan limits for loans closed January 1, 2009 through December 31, 2011.”
The VA announcement adds, “Because of this legislation, VA loan limits will remain the same for the remainder of the calendar year. Please note that VA does not have a maximum loan amount. Loan limit refers to the maximum loan a lender could make and still receive a 25% guaranty from VA, assuming the veteran has full entitlement.”
It’s important to point out that the loan limits for 2011 are not guaranteed for 2012. They may increase or decrease depending on a variety of factors, but any changes are announced by the VA–borrowers can be fully informed about VA loan limits for 2012 when they begin house hunting in the new year.