FHA recently announced that barring congressional intervention, the loan limit on FHA backed loans will revert to pre-2008 amounts on loans approved after October 1, 2011.  In 2008, Congress temporarily increased loan limits to 125% of the median house price in a response to the economic crisis and severe reduction in mortgage credit.  Under the proposed action by FHA, loan limits would, once again, be capped at 85% of the median home value. That means that that 32 counties in Colorado will be affected, including all metro counties, northern Colorado counties and many mountain counties. Weld county will be the hardest hit will a reduction of $146,500 in the loan limit.  Will this affect your association and property values within it?  Probably not as long as the market values of homes have already adjusted.  However, if the market value of homes increases, or the values have not declined at the same rate as FHA’s proposed adjustments, it is possible that FHA’s plans could negatively impact property values by reducing the availability of FHA backed loans and limiting financing sources for many owners.

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