The High Cost Ceiling applies to Danville, and the increased limit will remain thru 2010; helping to stimulate more purchase transactions!     


High Cost Area “Ceiling”


Any area where the loan limits may exceed the floor is known as a high cost area. Because ESA used a higher multiple in establishing the national FHA loan limit “ceiling” as a percent of the conforming loan limit than does HERA (175 percent versus 150 percent), the ESA national ceiling is binding as a maximum value for 2010 loan limits. However, eligibility for limits up to the higher ESA ceiling is only for those areas that had limits in that range in 2008. By property size, the national “ceiling” limits are as follows:


One-Unit $ 729,750

Two-Unit $ 934,200

Three-Unit $ 1,129,250

Four-Unit $ 1,403,400


HUD has released Mortgagee Letter 2009-50 outlining the loan limit effective for loans with “credit approval” on or after January 1, 2010 through December 31, 2010.  Since the basis for the loan limit calculations did not change from last year most areas have remained with the current loan limits. 


To help in determining what areas HUD has designated as an area eligible “at the ceiling and above” plus those “between the floor and ceiling rates” a copy of the mortgagee letter and attachments showing the loan limits are included for your review. Remember if your county is not on either one of the mortgagee letter attachments then the maximum loan limit amount for one-unit properties in your area is considered the “low cost area” and is $271,050.


Should you have a current loan approved with an amount that is higher than the 2010 limits that loan must close by the credit approval expiration date (the earlier of 90 days or appraisal expiration date)or be subject to the new loan limits.  Should our investors release a different policy, we will let you know.