Since Texas has one of the best values of price per square foot, our low median price range limits our chance for a temporarily increased Fannie Mae conforming loan limit.

If you are interested in the new MSA (metropolitan statistical area) loan limits as it applies to Texas. It does not!

The stimulus package was passed by the U.S. House of Representatives by a vote of 385-35. This allows for a temporary increase in conforming loan limits; that will apply to mortgages originated during the period beginning July 1, 2007 and ending December 31, 2008. Retroactive to July 1, 2007 to capture some of the mortgages sitting on originator balance sheets that lack an execution outlet.

What about loan limits for Texas? Here are some numbers…

CODE	Metropolitan Area Single Family	2007.IV p	%Chya	1.25XMSA	Proposed New Limit	Current Limit
11100	Amarillo, TX	120.2	11.0%	150.3	417.0	417.0
12420	Austin-Round Rock, TX	185.7	6.4%	232.1	417.0	417.0
13140	Beaumont-Port Arthur, TX	113.6	-5.3%	142.0	417.0	417.0
18580	Corpus Christi, TX	137.9	6.3%	172.4	417.0	417.0
19100	Dallas-Fort Worth-Arlington, TX	145.0	0.5%	181.3	417.0	417.0
21340	El Paso, TX	133.6	1.4%	167.0	417.0	417.0
26420	Houston-Baytown-Sugar Land, TX	150.3	1.1%	187.9	417.0	417.0
41700	San Antonio, TX	151.7	7.9%	189.6	417.0	417.0

The new loan limit will be 125% of the area median price of a residence of applicable size, but in no case >175% of the 2008 conforming sized limit for a residence of that size. Thus, the conforming sized loan limit is $417K; which means the new loan limit is capped at $729,750 (417 x 1.75). If the median price for an area was $425K, the following procedure would be used:

1. Multiply the median home price by 1.25 (425 x 1.25 = $531,250)

2. If 1.25X median home price <$729,750; use 1.25 x median home price

3. If 1.25X median home price >$729,750; use $729,750

In this example, $531,250 <729,750 so $531,250 would be the limit for our example area. The areas and area median home prices will be the area and area median prices used by the Secretary of Housing and Urban Development in determining FHA loan limits (which are actually done on a county by county basis).

The data used for these calculations is the Federal Housing Finance Board’s (FHFB) MIRS (Monthly Interest Rate Survey) data base, which captures median prices by metropolitan and micropolitan areas

Information on this subject is available on the U.S.Census Bureau website. For instance, a metropolitan or micropolitan statistical area has “a core area” that contains a substantial population nucleus, together with adjacent communities having a high degree of economic and social integration with that “core”.

The term “standard metropolitan area” (SMA) was first coined in 1949. It was changed to “standard metropolitan statistical area” (SMSA) in 1959 then to “metropolitan statistical area” (MSA) in 1983. In 2000, the term “core based statistical area” (CBSA) became effective; it refers collectively to metropolitan and micropolitan statistical areas. Each metropolitan statistical area must have at least one urbanized cluster of 50,000 or more inhabitants; each micropolitan statistical area must have at least one urban cluster of at least 10,000 but no more than 50,000 inhabitants. There are 362 metropolitan statistical areas and 560 micropolitan statistical areas.

This data is then overlaid with data from the National Association of Realtors for the MSAs that it covers. The National Association of Realtors covers 156 out of the 362 MSAs (the largest areas). HUD uses the maximum of these measures. This data is computed county-by-county before used by HUD.