rp-04-18.pdf

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Part III

Administrative, Procedural, and Miscellaneous

[26 CFR 601.201]: Rulings and determination letters
(Also: Part I, §§ 25, 103, 143)

Rev. Proc. 2004-18

SECTION 1. PURPOSE
This revenue procedure provides issuers of qualified mortgage bonds, as defined
in section 143(a) of the Internal Revenue Code, and issuers of mortgage credit
certificates, as defined in section 25(c), with (1) the nationwide average purchase price
for residences located in the United States, and (2) average area purchase price safe
harbors for residences located in statistical areas in each state, the District of Columbia,
Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands, and
Guam.

SECTION 2. CHANGES

Average area purchase price safe harbors were last published in Rev. Proc. 94-
55, 1994-2 C.B. 716, and were based on housing price estimates calculated by the
Department of Housing and Urban Development from mortgage data collected by the
Federal Housing Finance Board (FHFB). As more fully described in section 3 below,
the average area purchase price safe harbors contained in this revenue procedure are
based on the annual loan limits set by the Federal Housing Administration (FHA) on
FHA-insured mortgages (FHA loan limits). Because FHA loan limits do not differentiate
between new and existing residences, this revenue procedure sets forth a single
average area purchase price that may be used as a safe harbor for both new and
existing residences in each of the listed statistical areas. This revenue procedure also
sets forth a single nationwide average purchase price.

This revenue procedure also reflects the Office of Management and Budget’s
(OMB) current definitions for the nation=s metropolitan statistical areas (MSAs), as
contained in OMB Bulletin No. 03-04, dated and effective June 6, 2003. The safe
harbors provided in Rev. Proc. 94-55 were for MSAs defined in OMB Bulletin No. 93-17,
dated and effective June 30, 1993.

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SECTION 3. BACKGROUND

.01 Section 103(a) provides that, except as provided in section 103(b), gross
income does not include interest on any state or local bond. Section 103(b)(1) provides
that section 103(a) shall not apply to any private activity bond that is not a "qualified
bond" within the meaning of section 141. Section 141(e) provides, in part, that the term
"qualified bond" means any private activity bond if such bond (1) is a qualified mortgage
bond under section 143, (2) meets the volume cap requirements under section 146, and
(3) meets the applicable requirements under section 147.

.02 Section 143(a)(1) provides that the term "qualified mortgage bond" means a
bond that is issued as part of a qualified mortgage issue. Section 143(a)(2)(A) provides
that the term "qualified mortgage issue" means an issue of one or more bonds by a
state or political subdivision thereof, but only if: (i) all proceeds of the issue (exclusive of
issuance costs and a reasonably required reserve) are to be used to finance owner-
occupied residences; (ii) the issue meets the requirements of subsections (c), (d), (e),
(f), (g), (h), (i), and (m)(7) of section 143; (iii) the issue does not meet the private
business tests of paragraphs (1) and (2) of section 141(b); and (iv) with respect to
amounts received more than 10 years after the date of issuance, repayments of
$250,000 or more of principal on mortgage financing provided by the issue are used by
the close of the first semiannual period beginning after the date the prepayment (or
complete repayment) is received to redeem bonds that are part of the issue.
Average Area Purchase Price

.03 Section 143(e)(1) provides that an issue of bonds meets the purchase price
requirements of section 143(e) if the acquisition cost of each residence financed by the
issue does not exceed 90 percent of the average area purchase price applicable to
such residence. Section 143(e)(5) provides that, in the case of a targeted area
residence (as defined in section 143(j)), section 143(e)(1) shall be applied by
substituting 110 percent for 90 percent.

.04 Section 143(e)(2) provides that the term "average area purchase price"
means, with respect to any residence, the average purchase price of single-family
residences (in the statistical area in which the residence is located) that were purchased
during the most recent 12-month period for which sufficient statistical information is
available. Under sections 143(e)(3) and (4), respectively, separate determinations are
to be made for new and existing residences, and for two-, three-, and four-family
residences.

.05 Section 143(e)(2) provides that the determination of the average area
purchase price for a statistical area shall be made as of the date on which the
commitment to provide the financing is made or, if earlier, the date of the purchase of
the residence.

.06 Section 143(k)(2)(A) provides that the term "statistical area" means (i) a

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metropolitan statistical area (MSA), and (ii) any county (or the portion thereof) that is not
within an MSA. Section 143(k)(2)(C) further provides that if sufficient recent statistical
information with respect to a county (or portion thereof) is unavailable, the Secretary
may substitute another area for which there is sufficient recent statistical information for
such county (or portion thereof). In the case of any portion of a State which is not within
a county, section 143(k)(2)(D) provides that the Secretary may designate as a county
any area that is the equivalent of a county. Section 6a.103A-1(b)(4)(i) of the Temporary
Income Tax Regulations (issued under section 103A of the Internal Revenue Code of
1954, the predecessor of section 143) provides that the term “State” includes a
possession of the United States and the District of Columbia.

.07 Section 6a.103A-2(f)(5)(i) provides that an issuer may rely upon the average
area purchase price safe harbors published by the Department of the Treasury for the
statistical area in which a residence is located. Section 6a.103A-2(f)(5)(i) further
provides that an issuer may use an average area purchase price limitation different from
the published safe harbor if the issuer has more accurate and comprehensive data for
the statistical area.

Qualified Mortgage Credit Certificate Program

.08 Section 25(c) permits a state or political subdivision to establish a qualified
mortgage credit certificate program. In general, a qualified mortgage credit certificate
program is a program under which the issuing authority elects not to issue an amount of
private activity bonds that it may otherwise issue during the calendar year under section
146, and in their place, issues mortgage credit certificates to taxpayers in connection
with the acquisition of their principal residences. Section 25(a)(1) provides, in general,
that the holder of a mortgage credit certificate may claim a federal income tax credit
equal to the product of the credit rate specified in the certificate and the interest paid or
accrued during the tax year on the remaining principal of the indebtedness incurred to
acquire the residence. Section 25(c)(2)(A)(iii)(III) generally provides that residences
acquired in connection with the issuance of mortgage credit certificates must meet the
purchase price requirements of section 143(e).

Income Limitations for Qualified Mortgage Bonds and Mortgage Credit Certificates

.09 Section 143(f) imposes limitations on the income of mortgagors for whom
financing may be provided by qualified mortgage bonds. In addition, section
25(c)(2)(A)(iii)(IV) provides that holders of mortgage credit certificates must meet the
income requirement of section 143(f). Generally, under sections 143(f)(1) and
25(c)(2)(A)(iii)(IV), the income requirement is met only if all owner-financing under a
qualified mortgage bond and all mortgage credit certificates issued under a qualified
mortgage credit certificate program are provided to mortgagors whose family income is
115 percent or less of the applicable median family income. Section 143(f)(5), however,
generally provides for an upward adjustment to the percentage limitation in high housing
cost areas. High housing cost areas are defined in section 143(f)(5)(C) as any

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statistical area for which the housing cost/income ratio is greater than 1.2.

.10 Under section 143(f)(5)(D), the housing cost/income ratio with respect to any
statistical area is determined by dividing (a) the applicable housing price ratio for such
area by (b) the ratio that the area median gross income for such area bears to the
median gross income for the United States. The applicable housing price ratio is the
new housing price ratio (new housing average area purchase price divided by the new
housing average purchase price for the United States) or the existing housing price ratio
(existing housing average area purchase price divided by the existing housing average
purchase price for the United States), whichever results in the housing cost/income ratio
being closer to 1.

Average Area and Nationwide Purchase Price Limitations

.11 Average area purchase price safe harbors for each state and the District of
Columbia were last published in Rev. Proc. 94-55, 1994-2 C.B. 716. Average area
purchase price safe harbors for Puerto Rico, Guam, and the Virgin Islands were last
published in Rev. Proc. 93-15, 1993-1 C.B. 485. Average area purchase price safe
harbors for the Northern Mariana Islands were last published in Rev. Proc. 87-19, 1987-
1 C.B. 712. Average area purchase price safe harbors for American Samoa have not
been published previously.

.12 Nationwide average purchase price limitations were last published in Rev.
Proc. 94-55. Guidance with respect to the United States and area median gross income
figures that are to be used in computing the housing cost/income ratio described in
section 143(f)(5) was last published in Rev. Proc. 2003-29, 2003-1 C.B. 917.

.13 In Rev. Proc. 94-55, the average area purchase price safe harbors were
based on housing price estimates derived from mortgage survey data collected by the
FHFB. This revenue procedure uses FHA loan limits for a given statistical area to
calculate the average area purchase price safe harbor for that area. FHA sets limits on
the dollar value of loans it will insure based on median home prices and conforming loan
limits established by the Federal Home Loan Mortgage Corporation. In particular, FHA
sets an area's loan limit at 95 percent of the median home sales price for the area,
subject to certain floors and caps measured against conforming loan limits.

.14 To calculate the average area purchase price safe harbors in this revenue
procedure, the FHA loan limits are adjusted to take into account the differences
between average and median purchase prices. Because FHA loan limits do not
differentiate between new and existing residences, this revenue procedure contains a
single average area purchase price safe harbor for both new and existing residences in
a statistical area. The Treasury Department and the Internal Revenue Service have
determined that FHA loan limits provide a reasonable basis for determining average
area purchase price safe harbors. If the Treasury Department and the Internal Revenue
Service become aware of other sources of average purchase price data, including data

5
that differentiate between new and existing residences, consideration will be given as to
whether such data provide a more accurate method for calculating average area
purchase price safe harbors.

.15 The average area purchase price safe harbors listed in section 5.01 of this
revenue procedure are based on FHA loan limits released December 31, 2003. FHA
loan limits are available for statistical areas in each state, the District of Columbia,
Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands, and
Guam. See section 4.03 of this revenue procedure with respect to FHA loan limits
revised after December 31, 2003.

.16 OMB Bulletin No. 03-04, dated and effective June 6, 2003, revised the
definitions of the nation’s metropolitan areas and recognized 49 new metropolitan
statistical areas. As a result, this revenue procedure provides average area purchase
safe harbors for statistical areas that differ from those published in Rev. Proc. 94-55.
For example, OMB Bulletin No. 03-04 does not include primary metropolitan statistical
areas, a type of statistical area that was included in Rev. Proc. 94-55.

SECTION 4. APPLICATION

Average Area Purchase Price Safe Harbors

.01 Average area purchase price safe harbors for statistical areas in each state,
the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa,
the Virgin Islands, and Guam are set forth in section 5.01 of this revenue procedure.
Average area purchase price safe harbors are provided for single-family and two to
four-family residences. For each type of residence, section 5.01 of this revenue
procedure contains a single safe harbor that may be used for both new and existing
residences. Issuers of qualified mortgage bonds and issuers of mortgage credit
certificates may rely on these safe harbors to satisfy the requirements of sections
143(e) and (f). Section 5.01 of this revenue procedure provides safe harbors for MSAs,
and for certain counties and county equivalents. If no purchase price safe harbor is
available for a statistical area, the safe harbor for "ALL OTHER AREAS
" may be used
for that statistical area (except for Alaska, for which a separate safe harbor is provided
for statistical areas not listed).

.02 If a residence is in an MSA, the safe harbor applicable to it is the limitation of
that MSA. If an MSA falls in more than one State, the MSA is listed in section 5.01 of
this revenue procedure under each State.

.03 If the FHA revises the FHA loan limit for any statistical area after December
31, 2003, an issuer of qualified mortgage bonds or mortgage credit certificates may use
the revised FHA loan limit for that statistical area to compute (as provided in the next
sentence) a revised average area purchase price safe harbor for the statistical area
provided that the issuer maintains records evidencing the revised FHA loan limit. The

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revised average area purchase price safe harbor for that statistical area is computed by
dividing the revised FHA loan limit by .76.

.04 If, pursuant to section 6a.103A-2(f)(5)(i), an issuer uses more accurate and
comprehensive data to determine the average area purchase price for a statistical area,
the issuer must make separate average area purchase price determinations for new
and existing residences. Moreover, when computing the average area purchase price
for a statistical area that is an MSA, as defined in OMB Bulletin No. 03-04, the issuer
must make the computation for the entire applicable MSA. When computing the
average area purchase price for a statistical area that is not an MSA, the issuer must
make the computation for the entire statistical area and may not combine statistical
areas. Thus, for example, the issuer may not combine two or more counties.

.05 If an issuer receives a ruling permitting it to rely on an average area purchase
price limitation that is higher than the applicable safe harbor in this revenue procedure,
the issuer may rely on that higher limitation for the purpose of satisfying the
requirements of section 143(e) and (f) for bonds sold, and mortgage credit certificates
issued, not more than 30 months following the termination date of the 12-month period
used by the issuer to compute the limitation.
Nationwide Average Purchase Price

.06 Section 5.02 of this revenue procedure sets forth a single nationwide average
purchase price for purposes of computing the housing cost/income ratio under section
143(f)(5).

.07 Issuers must use the nationwide average purchase price set forth in section
5.02 of this revenue procedure when computing the housing cost/income ratio under
section 143(f)(5) regardless of whether they are relying on the average area purchase
price safe harbors contained in this revenue procedure or using more accurate and
comprehensive data to determine average area purchase prices for new and existing
residences for a statistical area that are different from the published safe harbors in this
revenue procedure.

.08 If, pursuant to section 7.02 of this revenue procedure, an issuer relies on the
average area purchase price safe harbors contained in Rev. Proc. 94-55, the issuer
must use the nationwide average purchase prices set forth in Rev. Proc. 94-55 in
computing the housing cost/income ratio under section 143(f)(5). Likewise, if, pursuant
to section 7.05 of this revenue procedure, an issuer relies on the nationwide average
purchase prices published in Rev. Proc. 94-55, the issuer may not rely on the average
area purchase price safe harbors published in this revenue procedure.

SECTION 5. AVERAGE AREA AND NATIONWIDE AVERAGE PURCHASE PRICES

.01 Average area purchase prices for single-family and two to four-family
residences in MSAs, and for certain counties and county equivalents. The safe harbor

7
for "ALL OTHER AREAS" (found at the end of the table below) may be used for a
statistical area that is not listed below (except for Alaska, for which a separate safe
harbor is provided for statistical areas not listed).

Area Name 1 Family 2 Family 3 Family 4 Family
ALASKA

ANCHORAGE, AK (MSA) $277,500$312,553$379,737 $438,158
All other areas in Alaska $250,000$281,579$342,105 $405,253

ARIZONA

FLAGSTAFF, AZ (MSA) $228,325$269,779$326,084 $405,253
MOHAVE COUNTY, AZ $230,375$269,779$326,084 $405,253

CALIFORNIA

INYO COUNTY, CA $353,750$398,434$484,079 $558,553
CHICO, CA (MSA) $231,875$269,779$326,084 $405,253
HUMBOLDT COUNTY, CA $212,500$269,779$326,084 $405,253
FRESNO, CA (MSA) $214,521$269,779$326,084 $405,253
LOS ANGELES-LONG BEACH-
SANTA ANA, CA (MSA) $381,999$488,975$591,028 $734,521
MADERA, CA (MSA) $214,521$269,779$326,084 $405,253
MERCED, CA (MSA) $231,250$269,779$326,084 $405,253
MODESTO, CA (MSA) $290,475$327,166$397,492 $458,645
NAPA, CA (MSA) $381,999$488,975$591,028 $710,526
OXNARD-THOUSAND OAKS-
VENTURA, CA (MSA) $381,999$488,975$591,028 $734,521
TUOLUMNE COUNTY, CA $243,750$274,539$333,553 $405,253
REDDING, CA (MSA) $228,092$269,779$326,084 $405,253
RIVERSIDE-SAN BERNARDINO-
ONTARIO, CA (MSA) $321,250$361,829$439,605 $507,237
SACRAMENTO-ARDEN-
ARCADE-ROSEVILLE, CA
(MSA) $369,407$464,605$564,474 $651,316
SALINAS, CA (MSA) $381,999$488,975$591,028 $734,521
SAN DIEGO-CARLSBAD-SAN
MARCOS, CA (MSA) $381,999$488,975$591,028 $734,521
SAN FRANCISCO-OAKLAND-
FREMONT, CA (MSA) $381,999$488,975$591,028 $734,521
SAN JOSE-SUNNYDALE-SANTA
CLARA, CA (MSA) $381,999$488,975$591,028 $734,521
SAN LUIS OBISPO-PASA
ROBLES, CA (MSA) $381,999$488,975$591,028 $710,329
SANTA BARBARA-SANTA
MARIA-GOLETA, CA (MSA) $381,999$488,975$591,028 $690,789
SANTA CRUZ-WATSONVILLE,
CA (MSA) $381,999$488,975$591,028 $734,521
SANTA ROSA-PETALUMA, CA
(MSA) $381,999$488,975$591,028 $734,521
STOCKTON, CA (MSA) $344,222$397,730$483,224 $557,566
NEVADA COUNTY, CA $312,500$351,974$427,632 $493,421

8
MENDOCINO COUNTY, CA $312,500$351,974$427,632 $493,421
VALLEJO-FAIRFIELD, CA (MSA) $381,999$488,975$591,028 $710,526
YUBA CITY-MARYSVILLE, CA
(MSA) $275,000$309,737$376,316 $434,211
AMADOR COUNTY, CA $218,750$269,779$326,084 $405,253
MONO COUNTY, CA $344,222$399,079$484,934 $559,539

COLORADO

BOULDER, CO (MSA) $369,407$438,453$532,699 $614,653
COLORADO SPRINGS, CO
(MSA) $260,500$293,405$356,474 $411,316
DENVER-AURORA, CO (MSA) $344,222$440,609$532,532 $631,579
LA PLATA COUNTY, CO $211,250$269,779$326,084 $405,253
EAGLE COUNTY, CO $344,222$440,609$532,532 $661,829
LAKE COUNTY, CO $344,222$440,609$532,532 $661,829
FORT COLLINS-LOVELAND, CO
(MSA) $280,000$315,368$383,158 $442,105
GREELEY, CO, (MSA) $286,875$323,112$392,566 $452,961
SILVERTHRONE, CO (MSA) $344,222$401,250$487,500 $562,500
GARFIELD COUNTY, CO $250,000$286,825$346,678 $430,855
GRAND COUNTY, CO $242,500$273,132$331,842 $405,253
GUNNISON COUNTY, CO $259,938$292,772$355,704 $410,428
OURAY COUNTY, CO $262,500$295,658$359,211 $414,474
PITKIN COUNTY, CO $224,161$286,825$346,678 $430,855
ROUTT COUNTY, CO $270,000$304,105$369,474 $426,316
SAN MIGUEL COUNTY, CO $344,222$401,250$487,500 $562,500

CONNECTICUT

BRIDGEPORT-STAMFORD-
NORWALK,CT (MSA) $381,999$434,964$528,462 $609,764
HARTFORD-EAST HARTFORD-
WEST HARTFORD, CT (MSA) $309,375$348,454$423,355 $488,487
NEW HAVEN-MILFORD, CT
(MSA) $381,999$435,039$528,553 $609,868
NEW LONDON-NORWICH, CT
(MSA) $268,750$302,697$367,763 $430,855
LITCHFIELD COUNTY, CT $255,000$287,211$348,947 $405,253
WINDHAM COUNTY, CT $224,161$269,779$326,084 $405,253

DELAWARE

DOVER, DE (MSA) $224,375$269,779$326,084 $405,253
PHILADELPHIA-CAMDEN-
WILIMINGTON, PA-NJ-DE-MD
(MSA) $300,459$338,412$411,154 $474,409

DISTRICT OF COLUMBIA

WASHINGTON-ARLINGTON-
ALEXANDRIA, DC-VA-MD-WV
(MSA) $381,999$448,442$544,837 $628,658

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FLORIDA
JACKSONVILLE, FL (MSA) $275,000$309,737$376,316 $434,211
MONROE COUNTY, FL $369,407$449,822$546,513 $630,592
MIAMI-FORT LAUDERDALE-
MIAMI BEACH, FL (MSA) $311,625$350,988$426,434 $492,039
NAPLES-MARCO ISLAND, FL
(MSA) $282,500$318,184$386,579 $446,053
SARASOTA-BRADENTON-
VENICE, FL (MSA) $251,500$283,268$344,158 $405,253

GEORGIA

ALBANY, GA (MSA) $213,125$269,779$326,084 $405,253
ATHENS-CLARKE COUNTY, GA
(MSA) $232,375$269,779$326,084 $405,253
ATLANTA-SANDY SPRINGS-
MARIETTA, GA (MSA) $232,375$269,779$326,084 $405,253

HAWAII

HONOLULU, HI (MSA) $490,625$552,599$671,382 $774,671
HAWAII COUNTY, HI $278,750$313,961$381,447 $440,132
MAUI COUNTY, HI $381,250$429,408$521,711 $601,974
KAUAI COUNTY, HI $368,750$415,329$504,605 $582,237
KALAWAO COUNTY, HI $239,400$306,379$370,326 $460,232

IDAHO

BLAINE COUNTY, ID $336,250$378,724$460,132 $530,921

ILLINOIS

CHICAGO-NAPERVILLE-
JOILET, IL-IN-WI (MSA) $312,500$351,974$427,632 $493,421
ST. LOUIS, MO-IL (MSA) $243,974$274,792$333,859 $405,253

INDIANA

ANDERSON, IN (MSA) $217,500$269,779$326,084 $405,253
CHICAGO-NAPERVILLE-
JOILETTE, IL-IN-WI (MSA) $312,500$351,974$427,632 $493,421
CINCINNATI-MIDDLETOWN,
OH-KY-IN (MSA) $235,646$269,779$326,084 $405,253
INDIANAPOLIS, IN (MSA) $217,500$269,779$326,084 $405,253
LOUISVILLE, KY-IN (MSA) $237,375$269,779$326,084 $405,253
SCOTT COUNTY, IN $237,375$269,779$326,084 $405,253

KANSAS

KANSAS CITY, MO-KS (MSA) $256,250$288,618$350,658 $405,253
LAWRENCE, KS (MSA) $221,813$269,779$326,084 $405,253

KENTUCKY

CINCINNATI-MIDDLETOWN,
OH-KY-IN (MSA) $235,646$269,779$326,084 $405,253
LOUISVILLE, KY-IN (MSA) $237,375$269,779$326,084 $405,253

10

MAINE

PORTLAND-SOUTH
PORTLAND, ME (MSA) $296,250$333,671$405,395 $467,763

MARYLAND

BALTIMORE-TOWSON, MD
(MSA) $344,222$389,557$473,292 $546,107
HAGERSTOWN-
MARTINSBURG, MD (MSA) $355,000$399,842$485,789 $560,526
ST. MARY'S COUNTY, MD $241,250$271,724$330,132 $405,253
PHILADELPHIA-CAMDEN-
WILMINGTON, PA-NJ-DE-MD,
(MSA) $300,459$338,412$411,154 $474,409
WASHINGTON-ARLINGTON-
ALEXANDRIA, DC-MD-VA-WV
(MSA) $381,999$448,442$544,837 $628,658

MASSACHUSETTS

BARNSTABLE TOWN, MA
(MSA) $374,875$422,228$512,987 $591,908
BOSTON-CAMBRIDGE-
QUINCY, MA-NH (MSA) $381,999$488,975$591,028 $734,521
PITTSFIELD, MA (MSA) $237,500$269,779$326,084 $405,253
PROVIDENCE-NEW BEDFORD-
FALL RIVER, RI-MA (MSA) $369,407$472,891$571,567 $710,309
SPRINGFIELD, MA (MSA) $237,500$269,779$326,084 $405,253
WORCESTER, MA (MSA) $381,999$488,975$591,028 $734,521
DUKES COUNTY, MA $344,222$440,609$532,532 $661,829
NANTUCKET COUNTY, MA $344,222$440,609$532,532 $661,829

MICHIGAN

LENAWEE COUNTY $297,500$335,079$407,105 $469,737
ANN ARBOR, MI (MSA) $297,500$335,079$407,105 $469,737
DETROIT-WARREN-LIVONIA,
MI (MSA) $297,500$335,079$407,105 $469,737
LANSING-EAST LANSING, MI
(MSA) $250,000$281,579$342,105 $405,253
MONROE, MI (MSA) $231,250$269,779$326,084 $405,253
BENZIE COUNTY, MI $224,161$270,937$327,483 $407,022
GRAND TRAVERSE COUNTY,
MI $224,161$270,937$327,483 $407,022
KALKASKA COUNTY, MI $224,161$270,937$327,483 $407,022
LEELANAU COUNTY, MI $224,161$270,937$327,483 $407,022

MINNESOTA

MINNEAPOLIS-ST. PAUL-
BLOOMINGTON, MN-WI (MSA) $291,000$327,758$398,211 $459,474
GOODHUE COUNTY, MN $224,875$269,779$326,084 $405,253
ROCHESTER, MN (MSA) $230,962$269,779$326,084 $405,253

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MISSISSIPPI
JACKSON, MS (MSA) $220,000$269,779$326,084 $405,253

MISSOURI

KANSAS CITY, MO-KS (MSA) $256,250$288,618$350,658 $405,253
ST, LOUIS, MO-IL (MSA) $243,974$274,791$333,858 $405,253

MONTANA

MISSOULA, MT (MSA) $241,250$271,724$330,132 $405,253

NEVADA

CARSON CITY, NV (MSA) $256,250$288,618$350,658 $405,253
DOUGLAS COUNTY, NV $350,000$394,211$478,947 $552,632
LAS VEGAS-PARADISE, NV
(MSA) $230,375$269,779$326,084 $405,253
NYE COUNTY, NV $230,375$269,779$326,084 $405,253
RENO-SPARKS, NV (MSA) $255,625$287,914$349,803 $405,253

NEW HAMPSHIRE

BOSTON-CAMBRIDGE-
QUINCY, MA-NH (MSA) $381,999$488,975$591,028 $734,521
MERRIMACK COUNTY, NH $218,166$269,779$326,084 $405,253
MANCHESTER-NASHUA, NH
(MSA) $369,407$472,891$571,567 $710,309

NEW JERSEY

ALLENTOWN-BETHLEHEM-
EASTON, PA-NJ (MSA) $369,407$459,255$557,974 $643,816
ATLANTIC CITY, NJ (MSA) $293,750$330,855$401,974 $463,816
NEW YORK-NEWARK-EDISON,
NY-NJ-PA (MSA) $381,999$488,975$591,028 $734,521
OCEAN CITY, NJ (MSA) $293,750$330,855$401,974 $463,816
PHILADELPHIA-CAMDEN-
WILMINGTON, PA-NJ-DE-MD
(MSA) $300,459$338,412$411,154 $474,409
TRENTON-EWING, NJ (MSA) $381,250$429,408$521,711 $601,974

NEW MEXICO

LOS ALAMOS COUNTY, NM $318,750$359,013$436,184 $503,289
SANTA FE, NM (MSA) $343,125$386,467$469,539 $541,776

NEW YORK

CAYUGA COUNTY, NY $211,250$269,779$326,084 $405,253
BUFFALO-CHEEKTOWAGA-
TONAWANDA, NY (MSA) $228,750$269,779$326,084 $405,253
NEW YORK-NEWARK-EDISON,
NY-NJ-PA (MSA) $381,999$488,975$591,028 $734,521
POUGHKEEPSIE-NEWBURGH-
MIDDLETOWN, NY (MSA) $337,500$380,132$461,842 $532,895
ROCHESTER, NY (MSA) $218,750$269,779$326,084 $405,253

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SYRACUSE, NY (MSA) $211,250$269,779$326,084 $405,253

NORTH CAROLINA

CHARLOTTE-GASTONIA-
CONCORD, NC-SC (MSA) $221,582$269,779$326,084 $405,253
DURHAM, NC (MSA) $230,000$269,779$326,084 $405,253
JACKSONVILLE, NC (MSA) $306,250$344,934$419,079 $483,553
LINCOLN COUNTY, NC $221,582$269,779$326,084 $405,253
RALEIGH-CARY, NC (MSA) $230,000$269,779$326,084 $405,253
ROWAN COUNTY, MC $221,582$269,779$326,084 $405,253
VIRGINIA BEACH-NORFOLK-
NEWPORT NEWS, VA-NC
(MSA) $286,250$322,408$391,711 $451,974

OHIO

AKRON, OH (MSA) $223,625$269,779$326,084 $405,253
ASHTABULA COUNTY, OH $290,797$327,530$397,933 $459,154
CINCINNATI-MIDDLETOWN,
OH-KY-IN (MSA) $235,646$269,779$326,084 $405,253
CLEVELAND-ELYRIA-MENTOR,
OH (MSA) $290,797$327,530$397,933 $459,154
COLUMBUS, OH (MSA) $274,738$309,441$375,957 $433,796
DAYTON, OH (MSA) $225,000$269,779$326,084 $405,253
SPRINGFIELD, OH (MSA) $225,000$269,779$326,084 $405,253

OREGON

CORVALIS, OREGON (MSA) $217,375$269,779$326,084 $405,253
MEDFORD, OR (MSA) $241,875$272,428$330,987 $405,253
PORTLAND-VANCOUVER-
BEAVERTON, OR-WA (MSA) $249,875$286,825$346,678 $430,855

PENNSYLVANIA

ALLENTOWN-BETHLEHEM-
EASTON, PA-NJ (MSA) $369,407$459,255$557,974 $643,816
NEW YORK-NEWARK-EDISON,
NY-NJ-PA (MSA) $381,999$488,975$591,028 $734,521
PHILADELPHIA-CAMDEN-
WILMINGTON, PA-NJ-DE (MSA) $300,459$338,412$411,154 $474,409
PITTSBURGH, PA (MSA) $228,188$269,779$326,084 $405,253
READING, PA (MSA) $217,382$269,779$326,084 $405,253
YORK – HANOVER, PA (MSA) $224,875$269,779$326,084 $405,253

RHODE ISLAND

PROVIDENCE-NEW BEDFORD-
FALL RIVER, RI - MA (MSA) $369,407$472,891$571,567 $710,309

SOUTH CAROLINA

CHARLESTON-NORTH
CHARLESTON, SC (MSA) $261,250$294,250$357,500 $412,500
CHARLOTTE-GASTONIA-$221,582$269,779$326,084 $405,253

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CONCORD, NC-SC (MSA)
GEORGETOWN COUNTY, SC $228,750$269,779$326,084 $405,253
BEAUFORT COUNTY, SC $262,500$295,658$359,211 $414,474
JASPER COUNTY, SC $262,500$295,658$359,211 $414,474

TENNESSEE

NASHVILLE-DAVIDSON-
MURFREESBORO, TN (MSA) $297,500$335,079$407,105 $469,737

TEXAS

HENDERSON COUNTY, TX $224,875$269,779$326,084 $405,253
AUSTIN - ROUND ROCK, TX
(MSA) $233,750$269,779$326,084 $405,253
HUTCHINSON COUNTY, TX $224,875$269,779$326,084 $405,253
DALLAS-FORT WORTH-
ARLINGTON, TX (MSA) $224,875$269,779$326,084 $405,253
SAN ANGELO, TX (MSA) $224,875$269,779$326,084 $405,253

UTAH

OGDEN-CLEARFIELD, UT
(MSA) $225,000$269,779$326,084 $405,253
PROVO-OREM, UT (MSA) $231,250$269,779$326,084 $405,253
SALT LAKE CITY, UT (MSA) $306,250$344,934$419,079 $483,553
KANE COUNTY, UT $228,325$269,779$326,084 $405,253
WASATCH COUNTY, UT $231,250$269,779$326,084 $405,253

VERMONT

BURLINGTON-SOUTH
BURLINGTON, VT (MSA) $281,125$316,636$384,697 $443,882

VIRGINIA

CHARLOTTESVILLE, VA (MSA) $255,416$287,678$349,516 $405,253
RICHMOND, VA (MSA) $249,938$281,509$342,020 $405,253
VIRGINIA BEACH-NORFOLK-
NEWPORT, NEWS, VA-NC
(MSA) $286,250$322,408$391,711 $451,974
WASHINGTON-ARLINGTON-
ALEXANDRIA, DC-MD-VA-WV,
(MSA) $381,999$448,442$544,837 $628,658

WASHINGTON

BELLINGHAM, WA (MSA) $236,250$269,779$326,084 $405,253
BREMERTON-SILVERDALE, WA
(MSA) $262,500$295,658$359,211 $414,474
MOUNT VERNON-ANACORLES,
WA (MSA) $214,934$269,779$326,084 $405,253
ISLAND COUNTY, WA $326,868$368,157$447,293 $516,108
OLYMPIA, WA (MSA) $225,000$269,779$326,084 $405,253
PORTLAND-VANCOUVER-
BEAVERTON, OR-WA (MSA) $249,875$286,825$346,678 $430,855

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SEATTLE-TACOMA-BELLVUE,
WA (MSA) $345,125$388,720$472,276 $544,934
JEFFERSON COUNTY, WA $212,500$269,779$326,084 $405,253
SAN JUAN COUNTY, WA $260,028$292,874$355,828 $430,855

WEST VIRGINIA

HAGERSTOWN-
MARTINSBURG, MD-WV (MSA) $355,000$399,842$485,789 $560,526
WASHINGTON-ARLINGTON-
ALEXANDRIA, DC-VA-MD-WV
(MSA) $381,999$448,442$544,837 $628,658

WISCONSIN

CHICAGO-NAPERVILLE-
JOILETT, IL-IN-WI (MSA) $312,500$351,974$427,632 $493,421
MADISON, WI (MSA) $242,625$273,272$332,013 $405,253
MILWAUKEE-WAUKESHA-
WEST ALLIS, WI (MSA) $233,125$269,779$326,084 $405,253
MINNEAPOLIS-ST. PAUL-
BLOOMINGTON, MN-WI (MSA) $291,000$327,758$398,211 $459,474
RACINE, WI (MSA) $233,125$269,779$326,084 $405,253

WYOMING

TETON COUNTY, WY $369,407$438,453$532,699 $614,653
SUBLETTE COUNTY, WY $224,375$269,779$326,084 $405,253

GUAM
$237,500$269,779$326,084 $405,253

PUERTO RICO

FAJARDO, PR (MSA) $325,000$366,053$444,737 $513,158
SAN JUAN-CAGUAS-
GUAYNABO, PR (MSA) $325,000$366,053$444,737 $513,158

VIRGIN ISLANDS

ST. CROIX $287,500$323,816$393,421 $453,947
ST. JOHN $246,447$277,578$337,243 $405,253
ST. THOMAS $318,750$359,013$436,184 $503,289

ALL OTHER AREAS
$210,758$269,779$326,084 $405,253

.02 Nationwide average purchase price (for use in the housing cost/income ratio
for new and existing residences): $218,100

SECTION 6. EFFECT ON OTHER DOCUMENTS
Rev. Proc. 94-55, Rev. Proc. 93-15, and Rev. Proc. 87-19 are obsolete except as
provided in section 7 of this revenue procedure.

15
SECTION 7. EFFECTIVE DATES

.01 Issuers may rely on this revenue procedure to determine average area
purchase price safe harbors for commitments to provide financing or issue mortgage
credit certificates that are made, or (if the purchase precedes the commitment) for
residences that are purchased, in the period that begins on February 10, 2004, and
ends on the date as of which the safe harbors contained in section 5.01 of this revenue
procedure are rendered obsolete by a new revenue procedure.

.02 Notwithstanding section 6 of this revenue procedure, issuers may continue to
rely on the average area purchase price safe harbors contained in Rev. Proc. 87-19,
Rev. Proc. 93-15, and Rev. Proc. 94-55 with respect to bonds sold, or for mortgage
credit certificates issued with respect to bond authority exchanged, before March 11,
2004, if the commitments to provide financing or issue mortgage credit certificates are
made on or before April 10, 2004.

.03 Except as provided in section 7.04, issuers must use the nationwide average
purchase price limitation contained in this revenue procedure for commitments to
provide financing or issue mortgage credit certificates that are made, or (if the purchase
precedes the commitment) for residences that are purchased, in the period that begins
on February 10, 2004, and ends on the date when the nationwide average purchase
price limitation is rendered obsolete by a new revenue procedure.

.04 Notwithstanding sections 6 and 7.03 of this revenue procedure, issuers may
continue to rely on the nationwide average purchase prices set forth in Rev. Proc. 94-55
with respect to bonds sold, or for mortgage credit certificates issued with respect to bond
authority exchanged, before March 11, 2004, if the commitments to provide financing or
issue mortgage credit certificates are made are made on or before April 10, 2004.

SECTION 8. PAPERWORK REDUCTION ACT

The collection of information contained in this revenue procedure has been
reviewed and approved by the Office of Management and Budget in accordance with
the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1877.

An agency may not conduct or sponsor, and a person is not required to respond
to, a collection of information unless the collection of information displays a valid OMB
control number.

This revenue procedure contains a collection of information requirement in
section 4.03. The purpose of the collection of information is to verify the applicable FHA
loan limit that issuers of qualified mortgage bonds and qualified mortgage certificates
have used to calculate the average area purchase price for a given statistical area for
purposes of section 143(e) and 25(c). The collection of information is required to obtain

16
the benefit of using revisions to FHA loan limits to determine average area purchase
prices. The likely respondents are state and local governments.

The estimated total annual recordkeeping burden is: 15 hours.

The estimated annual burden per recordkeeper: 15 minutes.

The estimated number of recordkeepers: 60.

Books or records relating to a collection of information must be retained as long
as their contents may become material in the administration of any internal revenue law.
Generally tax returns and tax return information are confidential, as required by 26
U.S.C. 6103.

SECTION 9. DRAFTING INFORMATION

The principal authors of this revenue procedure are Gary W. Bornholdt and
Timothy L. Jones of the Office of Division Counsel/Associate Chief Counsel (Tax
Exempt & Government Entities). For further information regarding this revenue
procedure contact Gary W. Bornholdt on (202) 622-3980 (not a toll free call).