The coming change in the conforming loan limit will have a much larger impact on loans insured by the Federal Housing Administration than on those purchased or securitized by either Fannie Mae or Freddie Mac.
According to an analysis by the FHA, loan limits on government insured mortgages are likely to decline in 669 of the 3,334 counties or county equivalents when the ceilings revert back to the levels determined under the Housing and Economic Recovery Act of 2008. The shift will take place on Oct. 1 unless Congress intervenes.
That's almost three times as many markets that will be affected when it comes to loans that conform to the limits placed on Fannie and Freddie mortgages. According to an earlier analysis by the Federal Housing Finance Agency, only 250 county or county-equivalent areas — a "small fraction" of the total, the FHFA said — will be affected by the pending change, when the maximum loan limit falls to $625,500 from $729,750.
The FHA analysis shows that its loan limit would fall by more than 5% in eight states — Arizona, California, Colorado, Connecticut, Massachusetts, Maine, New Hampshire and Oregon — as well as the District of Columbia.
