FHA Home Hud Loan Increase
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.
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