December 11th, 2013
A new ceiling has been introduced for home loans offered by the U.S. Federal Housing Administration as part of the Housing and Economic Recovery Act of 2008.
The U.S. Department of Housing and Urban Development, which regulates the FHA, announced that the new limits for single-family housing will be enacted Jan. 1, 2014. The national loan limits for highest-cost areas will be cut back from $729,750 to $625,500. Areas are eligible for FHA loan caps up to the national limit as well as those that surpass the standard for the U.S. based on median area home prices.
Caps for low-cost housing and Home Equity Conversion Mortgages – the FHA’s reverse mortgages – will be unchanged, remaining at $271,050 and $625,500, respectively. About 650 counties will be affected by the new loan limits.
The loan ceilings were originally raised under the Economic Stimulus Act of 2008 as a means to improve mortgage availability, but the FHA feels it can lessen its place in the housing finance market as U.S. real estate continues to recover.
“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,” said Carol Galante, FHA commissioner.