HOME Homeownership Value Limits

Description

Section 215(b) of NAHA requires that the initial purchase price or after-rehabilitation value of homeownership units assisted with HOME funds not exceed 95 percent of the area median purchase price for single family housing, as determined by HUD. Historically, HUD used the FHA Single Family Mortgage Limit (known as the 203(b) limits) as a surrogate for 95 percent of area median purchase price. However, statutory changes require the 203(b) limits to be set at 125 percent of area median purchase price. Consequently, participating jurisdictions (PJs) can no longer use the 203(b) limits as the HOME Program homeownership value limits (i.e., initial purchase price or after rehabilitation value).

In 2024, HUD made a major revision to the homeownership value limit methodology outlined in In Section 92.254(a)(2)(iii) of the Final Rule published on July 24, 2013, For existing housing, HUD will now be using the greater (rather than the lesser) of the state non-metropolitan and US non-metropolitan media sales values as the minimum value in which the limit is calculated. This change will substitute more local, state-level data for national-level data. This new methodology is effective September 1, 2024.

Newly Constructed Housing: The HOME homeownership value limits for newly constructed HOME units is 95 percent of the median purchase price for the area based on Federal Housing Administration (FHA) single family mortgage program data for newly constructed housing. Nationwide, HUD established a minimum limit, or floor, based on 95 percent of the U.S. median purchase price for new construction for nonmetropolitan areas. HUD has used the greater of these two figures as their HOME homeownership value limits for newly constructed housing in each area. HUD has also decreased the minimum number of sales transactions from 10 to 5 for the calculation of a state-level non-metro median sales price.

Existing Housing: The HOME homeownership value limits for existing HOME units is 95 percent of the median purchase price for the area based on Federal FHA single family mortgage program data for existing housing and other appropriate data (Federal Housing Finance Agency (FHFA) data on purchase mortgages securitized by Fannie Mae and Freddie Mac) that are available nationwide for sale of existing housing in standard condition. There are two states and the District of Columbia that have no non-metropolitan areas. HUD made a technical correction in 2024 to the rule that sets this minimum purchase prices as the greater of the state non-metro or the US non-metro median. HUD calculates for each state its non-metropolitan median purchase price as well as the US non-metropolitan median purchase price. The greater of these medians serves as the “state floor price” for maximum purchase price limits on existing homes. Note that this represents a change to the methods, as previous practice was to use the lesser of these medians.

PJ Determined Limits: In lieu of the limits provided by HUD, a PJ may determine 95 percent of the median area purchase price for single family housing in the jurisdiction annually in accordance with procedures established at § 92.254(a)(2)(iii). The PJ must submit these limits as part of its Consolidated Plan/Annual Action Plan.

The effective date of the 2024 Homeownership Value Limits is September 1, 2024. These limits remain in effect until HUD issues new limits.