Local limits are based on 95% of area median home prices. However, in most cases the limit cannot exceed the ceiling for high-cost areas, which is 87% of the Freddie Mac limit, or be less than the lowest FHA loan limit, or floor, which is 48% of the Freddie Mac limit.
Based on the Freddie Mac 2004 limit, the FHA ceiling and floor in 2004 are expected to be approximately $290,319, and $160,176, respectively. Areas with loan limits between the FHA ceiling and floor will not automatically increase, but will be subject to review by HUD.
HUD is expected to announce the new FHA loan limits by the end of the year.
A special provision in the law allows the conforming loan limit to be increased by up to 50% for Alaska, Guam, Hawaii and the Virgin Islands, which would mean that the Fannie/Freddie limit for these areas would become $500,550. The FHA ceiling for these areas would become approximately $435,478.
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