December 16, 2015
Recently we wrote about a press release issued by the FHA and HUD announcing FHA loan guaranty limits for the coming new year. The FHA has published two sets of loan limits mortgagee letters–one for Home Equity Conversion Mortgages (FHA HECM loans) and the other for FHA single-family “forward loans”.
We covered the FHA HECM loan guaranty limits in a previous blog post; now we turn our attention to the specifics of the FHA forward mortgage loan guaranty limits as published in Mortgagee Letter (ML) 2015-30, which begins by explaining how FHA loan limits are set.
According to that mortgagee letter, “The Federal Housing Administration (FHA) calculates forward mortgage limits based on the median house prices in accordance with the National Housing Act. FHAs Single Family forward mortgage limits are set by Metropolitan Statistical Area (MSA) and county and are published periodically. FHA publishes updated limits effective for each calendar year.”
FHA sets these limits, the ML states, “at or between the low cost area and high cost area limits based on the median house prices for the area.”
Depending on market conditions from year to year, the FHA/HUD may need to adjust certain features including the dollar amounts specified for low-cost and high-cost areas. This year, the FHA ML says, “For calendar year 2016, there are no changes to the low cost area and high cost area limits published in HUD Handbook 4000.1…”
In 2016, more than 180 areas will see increases in the maximum FHA loan limit. But the mortgagee letter points out, “There are no jurisdictions with a decrease in loan limits from the 2015 levels.”
If you want to know how the lender will know whether your housing market has seen such an increase, the ML explains, ” To enable Mortgagees to easily identify areas with loan limit increases, FHA has published a separate list of counties with loan limit increases. Mortgagees may view this list along with a list of areas at the ceiling and a list of areas between the floor and ceiling on the Maximum Mortgage Limits web page.”
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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