No income limit for FHA-insured loans

As you may know, there is no income limit for borrowers seeking FHA-insured loans. However, FHA-insured mortgages cannot exceed a maximum mortgage amount set by law. The maximum mortgage amounts allowed for FHA-insured loans are set area-by-area, and different limits are in effect for one-family, two-family, three-family, and four-family properties. Limits for high- and low-cost areas are subject to a statutory floor and ceiling. For FY2011, the maximum loan amount for a one-family home is the higher of either 125% of the 2007 area median home price or 115% of the 2008 area median home price. The mortgage limit for a one-family home in a given area cannot exceed the statutory ceiling of $729,750 (high-cost areas) or be lower than the statutory floor of $271,050 (low-cost areas). These limits were first put in place by the Economic Stimulus Act of 2008, and have since been extended several times.  Most recently, the Continuing Appropriations Act of 2011 extended these limits until September 30, 2011. Unless Congress acts to extend the current mortgage limits beyond September 30, 2011, some of the mortgage limits will decrease at that time, with the maximum mortgage amount in high cost-areas falling to $625,500 for a one-unit home.

An extension of these limits is not included in H.J.Res.79, the Continuing Appropriations Resolution of 2012,  legislation to extend funding for federal agencies through November 18, 2011 which was introduced by House Republicans last week and is expected to be considered by the House of Representatives this week.  However, a standalone bill,H.R.1754, the Preserving Equal Access to Mortgage Finance Programs Act, has been introduced in the House of Representatives.  This legislation, which would increase limitations on the maximum original principal obligation of mortgages that may be purchased by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation Association (Freddie Mac) in certain regions, and would give the Director of the Federal Housing Finance Agency (FHFA) discretion to prevent or limit a decrease in the limitation for an area, has been referred to the House Committee on Financial Services.