December 11, 2013
The FHA has announced changes to FHA loan limit policy. According to HUDNo.13-184, effective at the beginning of the new year in 2013, there will be new FHA single-family loan limits that comply with the Housing and Economic Recovery Act (HERA) of 2008.
FHA Commissioner Carol Galante was quoted in the press release, saying, “As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play…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.”
The press release says that current standard FHA loan limits “for areas where housing costs are relatively low” will remain unchanged in 2014–that limit at the time of this writing is $271,050. “The new national-ceiling loan limit for the very highest cost areas will be reduced from $729,750 to $625,500.”
The press release adds, “Areas are eligible for FHA loan limits above the national standard limit, and up to the national ceiling level, based on median area home prices. Additional information and loan limit adjustments for two-, three-, and four-unit properties, and in Special Exception Areas, are noted in FHA’s mortgagee letter.” The release also addresses those who have existing FHA loans, who “may continue to utilize FHA’s Streamline refinance program regardless of their loan balance. The changes announced today are effective for case number assignments between January 1, 2014, and December 31, 2014.”
The 2014 changes to FHA loan limit policy will be “the first full implementation of loan-limit calculations under HERA.” The release says more than six hundred counties will get lower FHA mortgage loan limits as a result of the pending changes. “The higher limits that have been in place for six years were established by the Economic Stimulus Act of 2008 as emergency measures to assure that mortgage credit was widely available during a time when private lending options were severely constrained. The lower loan limits under HERA were originally scheduled to take effect in January of 2009, however, due to continuing strains in credit markets, Congress delayed implementation several times.”
Borrowers should know that mortgage loan limits for FHA-insured reverse mortgages/HECM loans will remain unchanged, according to policies in place at the time of this writing.
Do you have questions about FHA loan? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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