The Federal Housing Administration (FHA) is bringing down loan limits on single-family mortgages next year, HUD announced.

According to Mortgagee Letter 13-43, FHA’s revised ceiling for single-family loan limits will come down to $625,000 from $729,750. The change marks the first full implementation of loan-limit calculations under the Housing and Economic Recovery Act of 2008; the lower limits were originally scheduled to be put into place at the start of 2009, but Congress delayed any action “due to continuing strains in credit markets” at the time, HUD said.

“As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play,” said FHA Commissioner Carol Galante. “Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved.”

As a result of the changing law, HUD estimates about 650 counties will have lower limits.

Meanwhile, the loan limit floor for low-cost housing areas will remain at $271,050. Also left untouched were loan limits for FHA-insured reverse mortgages, which will continue to have a maximum claim amount of $625,500.

As per usual, counties in Alaska, Hawaii, Guam, and the Virgin Islands will see higher limits to account for greater construction costs. The limit for a single-family loan in those areas will be $938,250.

HUD also announced it is accepting requests for local increases until January 6, 2014. Requests sent in must have sufficient sales price data for one-family properties from January through August 2013; HUD will only consider changes in counties for which it lacks sufficient transaction data