NEWS
BYTES
February 2006
from the hud.gov website
HUD
ANNOUNCES HIGHER FHA HOME LOAN LIMITS TO HELP MORE AMERICAN
FAMILIES BECOME HOMEOWNERS
WASHINGTON - Housing and Urban Development Secretary Alphonso
Jackson today announced that the Federal Housing Administration
(FHA) has increased its single-family home mortgage limits by
more than 15 percent.
Effective
January 1, 2006, FHA will insure single-family home mortgages
up to $200,160 in standard areas and up to $362,790 in high
cost areas. The high cost amount is almost $50,000 more than
last year. The loan limits for two-, three- and four-unit dwellings
also increased. FHA is sending letters to thousands of mortgage
lenders and brokers to make them aware of the higher rates that
can help families.
"This
Administration is working to make homeownership more affordable
and accessible so that more families can own a piece of the
American Dream," said Jackson. " These higher loan
limits will strengthen the economy by helping to create more
construction and more jobs, while contributing to the President's
commitment to create 5.5 million new minority homeowners by
the end of the decade."
Last
year, the loan limits were $172,632 in standard areas and $312,895
in high cost areas. Five years ago, the limits ranged from just
$132,000 to $239,250. These levels were 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 effectively
locked out of the process.
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.
HUD calculates the FHA mortgage loan limit for 3,226 geographic
areas within the United States. The limits vary from area to
area, but all fall within the new rage of $200,160 to $362,790.
Higher
FHA loan limits don't cost the government any money, because
the FHA Insurance Fund is fully supported by premiums paid by
borrowers who receive FHA insurance.
Many
low-income and first time homebuyers are attracted to FHA-insured
loans because the agency requires only a three-percent down
payment.
The
increases will also 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. The reverse mortgage is repaid, with interest, when
a homeowner sells the home or dies.
HUD
is the nation's housing agency committed to increasing homeownership,
particularly among minorities; creating affordable housing opportunities
for low-income Americans; and supporting the homeless, elderly,
people with disabilities and people living with AIDS. The Department
also promotes economic and community development as well as
enforces the nation's fair housing laws. More information about
HUD and its programs is available on the Internet at www.hud.gov
and espanol.hud.gov.
