FHA increased its down payment requirements, effective January 1, 2009, from 2.85% to 3.5%. Although the maximum conforming loan limit of $417,000 remained the same, many parts of the country have lower loan limits. In areas where 115% of the median housing price is less than 65% of the Freddie Mac limit, the maximum FHA loan for 2009 is $271,050.
Some cities such as Sacramento fell under guidelines in 2008 for FHA loans of $580,000. In 2009, those higher limits fell to $474,950.
Grade-A borrowers who enjoyed FICO scores above 720 received preferential interest rates in 2008. Borrowers with scores below 600 had a tough time qualifying for conventional loans.
Borrowers who did not want to pay a mortgage insurance premium saved for a down payment and took out 80% loans.
