FHA ups loan limits
January 6, 2003
Single-family mortgage allowance jumps 7%
Inman News Features
The Federal Housing Administration is increasing its single-family home mortgage limit by more than 7 percent, according to a statement released by the U.S. Department of Housing and Urban Development.
Effective Jan. 1, 2003, FHA is insuring single-family home mortgages up to $154,896 in low cost areas and up to $280,749 in high cost areas.
The loan limits for two-, three- and four-unit dwellings also increased.
HUD Secretary Mel Martinez said the expanded loan limits aim to increase the nation's affordable housing opportunities. FHA-insured loans require only a three-percent downpayment from the buyer, and therefore often attract first-time and low-income buyers.
The new loan limits are part of an annual adjustment HUD makes to account for rising home prices. Under federal law, loan limits are tied to the conforming loan limits of Freddie Mac and Fannie Mae, federally chartered corporations that buy and package mortgages.
Four years ago, the loan limits ranged from just $115,200 to $208,800, levels below the cost of many homes in many communities. As a result, families who needed FHA mortgage insurance to qualify to buy a home were locked out of the process.
The increases also aim to benefit senior citizens who qualify for FHA-insured reverse mortgages. Reverse mortgages allow homeowners age 62 and older to borrow against the value of their homes without selling them. Homeowners can select a lump-sum payment, monthly payments or tap into a line of credit. No repayment is required as long as a homeowner lives in a home with a reverse mortgage, and the reverse mortgage is repaid with interest when a homeowner sells the home or dies.
The FHA Insurance Fund is fully supported by premiums paid by borrowers who receive FHA insurance.
Copyright: Inman News Service