FHA loan limits across the United States had been set at a higher level to help the housing market from further decline, and in September 2010 that was extended through September 2011.

Baltimore Area Loan Limits courtesy of NAR

The current loan limit in Baltimore County, Baltimore City, and Harford County is $560,000 for an FHA loan (pop over here to know more). This means that you can get an FHA loan of up to $560,000 for a house in Baltimore.

If the loan limit extension is allowed to expire, then that limit will be dropped to $494,500 (a drop of $65,500!)

When I think of the Timonium housing market, or Towson house values, many homes are in the $450-550,000 range, and if this extension were to expire, those from $500-560,000 no longer would qualify for FHA financing, which could hurt homesellers in a big way.

Many Towson homebuyers do not have a large percentage to put down on a home, and would need the low 3.5% downpayment program that FHA has to offer. If the loan limits drop, this could bring house values down. How?

Here’s a possible example:

Today, you meet with a REALTOR(R), and after meeting, you determine that your house is worth around $525,000. A qualified buyer using FHA secured financing can currently buy your home.

As of October 1, 2011, that same buyer would not be able to buy your house. What do you think would happen? Might their best & highest offer be $494,500, then, since they need FHA secured financing?

So what can you do? Read more details and information about the bill from the National Association of REALTORS(R). Find out who your local representatives and senators are here, and make your voice heard. Tell them that “H.R. 1754 has been introduced in the House by Reps. Miller (R-CA) and Sherman (D-CA) to make the current limits permanent. No similar bill has yet been introduced in the Senate” and that this bill needs to pass!