FHA Home Loans Refinancing

Home Buyers, Real Estate Agents and Lenders Hoping for Higher 2014 FHA Loan Limits


Its about that time of year when government agencies convene in an effort to discuss 2014 FHA loan limits, guideline modifications, easements and new standards for home buying and refinancing in the year to come. To nobody’s surprise many home buyers and real estate professionals are praying for FHA to raise loan amount limits in 2017. This helps borrowers because it often increases their purchase power by allowing higher loan amounts with house buying that only requires a 3.5% down payment in most cases.

How New House Buyers Benefit from Raised 2014 FHA Loan Limits

Did you know that FHA mortgage limits vary by property type? The Federal agency insures larger loan sizes for a 4-unit home, for example, than a single-family home or a condominium. The FHA will also insure greater loan sizes in regions the agency considers to be “high-cost”. If you were wondering, the Federal Housing Administration deliberates that an area is high-cost if its median house sale price exceeds the national average by specific fixed amount. Did you know that this year there were 74 counties in the United States that reached the maximum size allowed for FHA insured mortgages? Dan from the Mortgage Reports.com reported that there are another 697 counties in nationally in which the FHA limits are higher than the conforming limit set by Fannie Mae and Freddie Mac.

What are the Loan Amount Limits for FHA Mortgages in Your Area?

In all other counties, limits on FHA home loans are as follows:
1-Unit House : $271,050
2-Unit House : $347,000
3-Unit House : $419,425
4-Unit House : $521,250

In high-cost regions such as New York City; New Jersey, Colorado, Virginia, Maryland, Washington and most of California. In these regions, FHA loan limits range up to:
1-Unit House : $729,750
2-Unit House : $934,200
3-Unit House : $1,129,250
4-Unit House : $1,403,400

The FHA has designated four areas in which loan limits are even higher, replicating the abnormally high cost of living. These four areas are Hawaii, Alaska, Guam and the U.S. Virgin Islands.
1-Unit House : $1,094,625
2-Unit House : $1,401,300
3-Unit House : $1,693,875
4-Unit House : $2,105,100

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Please be aware that the Department of Housing and Urban Development, Congress and the Federal Housing Administration review the loan limits in early fall each year in an effort to set the maximum loan limits for the following year. When delinquencies and defaults rise, it is common for HUD to adjust the FHA mortgage limits accordingly. We anticipate that 2014 FHA loan limits will be similar to this year as defaults have tapered off and the housing sector has been recovering with strong gains in most areas across the United States.


2013 FHA Loan Limits


FHA mortgages have been more accessible to Americans than ever before as Congress has been approving higher loan amounts on FHA limits. With the government endorsing higher limits on lending we anticipate that 2013 FHA loan limits will remain high. Today’s loan amount restrictions are always updated on the Department of Housing and Urban Development website for each county in each state, Guam, and the U.S. Virgin Islands. The current limits are $271,050 in low cost regions of the country and $625,500 in areas deemed as higher cost zones.  The 2013 loan limits should remain at the current levels with higher FHA loan amounts than in previous years.

  • Higher 2013 Loan Limits on FHA Mortgages
  • FHA ensures lower down-payment requirements than loans that conform to Fannie Mae or Freddie Mac
  • HUD approves FHA financing with fico scores as low as 500
  • Interest Rates on 30-year FHA mortgages have fallen between 3.25 and 3.5% on average nationally.

In a recent HUD letter, they said, “For several years, FHA levels were below the cost of the average home in communities across the United States. As a result, families who needed insurance to become eligible to finance a house were effectively blocked from the process. In many instances, borrowers turned to riskier sub-prime loans.

How High Will Congress Raise the FHA Loan Amounts for  2013?

Some of the benefits of FHA mortgages include low down-payment requirements, no penalties for early pay-offs or refinances and limitations on closing costs. Although FHA recently established a minimum credit score of 500, they still approve home loans bad credit when borrower’s can come up with more of a down-payment than 3.5%.

A few years back, HUD approved the upfront mortgage insurance premiums for home buying and streamline refinancing to 2.25% and the premium rate on HECMs remains at 2%. Home equity conversions are a type of “reverse mortgage” that is government insured for eligible borrower’s that are at least 65 years of age.

Speak with your loan representative to determine 2013 FHA  limits for loans in your region.


U.S. Senate Considers FHA Loan Reform


With the government loan limits set to expire in a few weeks many lenders are voicing their concerns in regards to a pool of borrowers in high cost regions that will not be allowed to us FHA loans for buying or refinancing because there mortgage balance exceeds to the new loan limit level. The Federal Housing Administration has made it clear that they will make every effort to reduce loan defaults and bolster FHA reserves. The FHA finance entity believes that reducing the maximum FHA loan limits will help them achieve their goals.

* Fannie Mae, Freddie Mac drawn $170 billion in taxpayer funds

* Many Republicans want to end federal backstop in housing

* FHA loan limits on home mortgages expires October 1st

The FHA limits puts a cap on the size of mortgages that the FHA can insure. The loan limits are set to drop from $729,500 to $625,500 on October 1st in the high cost housing markets. Three years after taking control of Fannie Mae and Freddie Mac, the government now backs nearly 90% of new home purchase  transactions.

On Tuesday top Senate lawmakers laid bare long-standing differences on how to wind down government-backed home loan enterprises Fannie Mae and Freddie Mac underscoring the difficulty Congress will face when stimulating and financing home loans 100% with a better system to aid in the recovery of the U.S. housing sector.

Democrats and Republicans alike agree both entities should be wound down but whether the government should still have a role subsidizing housing finance is still unsettled. “I am concerned about the unintended consequences for our housing market and economy that could result if a government role is eliminated completely,” Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, said during the panel’s tenth hearing on housing finance reform. He said that record low FHA mortgage rate, which presently hanging around 4%, would likely jump across the country if the government backstop is diminished. Fannie Mae and Freddie Mac, the two congressionally chartered mortgage behemoths seized by the government in 2008 as losses on sub-prime loans mounted, are critical to the housing market.  Read the original Reuters Article.


2012 FHA Loan Limits May be Lower


For the last few months, we have heard whispers in regards to HUD minimizing the 2012 FHA loan limits. The reality is that lower loan limits will have an adverse effect homeowners, new prospective home buyers and mortgage professionals, especially in high cost regions like California, Colorado, New York, New Jersey and Washington D.C. In a recent article, Lew Sichelman discusses the pending changes for conforming and FHA loan limit in 2012.

What is the Maximum Loan Amount with FHA in Your Neighborhood?

Unquestionably the revisions on home loan limits will have a significant impact on the FHA home loan programs.  These are mortgages insured by the Federal Housing Administration, because they have been more aggressive on credit and home equity guidelines compared loan programs securitized by Fannie Mae or Freddie Mac. Sichelman revealed in a recent analysis that FHA loan limits will likely be reduced in 669 of the 3,334 counties or county equivalents when the ceilings revert back to the levels determined under the Housing and Economic Recovery Act of 2008.

To Get More Info on FHA Limits and Loan Amount Eligibility  (no cost or obligation)

Congress has extended FHA loan limits in 2009, 2010 and 2011 on an annual basis, but in the upcoming year it appears that Fannie Mae, Freddie Mac and FHA will reduce maximum loan limits rather than extend them.  Unfortunately this will reduce the pool of homeowners looking to refinance with FHA. Many FHA lenders are concerned that the reduced 2012 FHA loan limits will have a negative impact on their business.  Many economists also point that if HUD reduces loan limits on FHA home loans it could actually trigger an increase in foreclosures, because more homeowners will be unable to find affordable home loans.

How Will Lower FHA Loan Limits in 2012 Effect Loan Origination?

The lower FHA limits will take place on October 1 unless Congress intervenes. That’s almost three times as many markets that will be affected when it comes to loans that conform to the limits placed on Fannie/Freddie mortgages. According to an earlier analysis by the Federal Housing Finance Agency, only 250 county or county-equivalent areas — a “small fraction” of the total, the FHFA said — will be affected by the pending change.  The government home finance analysis indicates that its FHA loan limit would fall by more than 5% in eight states — Arizona, California, Colorado, Connecticut, Massachusetts, Maine, New Hampshire and Oregon — as well as the District of Columbia. When evaluated for the potential impact on the number of loans eligible for government insurance, Colorado, Maine and Oregon fall off the list and Nevada and Puerto Rico come on.

Loans for People with Poor Credit! Home Buying with Bad Credit FHA Loan Rates have fallen below 4% on fixed rate mortgages!

The FHA analysis reported a total of 44 Puerto Rican municipalities would feel the greatest pinch, with a projected decline in 2012 FHA loan amounts of a whopping $221,000. But that would only impact 4% of those areas’ loan count. Other places would take big hits, too. The limit is projected to fall by $75,200 in Maricopa County, Ariz., from $346,250 to $271,050. In Los Angeles County, the lid would drop $104,250, from $729,750 to $625,500. But in Mendocino and San Joaquin Counties in California, it would sink by $138,750 and $184,000, respectively. The change could be equally as tough on the East Coast, too. In Monroe County, Fla., for example, the FHA maximum is projected to plunge by $200,500, from $729,750 to $529,000.

Until three years ago, FHA mortgage limits were set at 95% of the median price house price for each particular area. But the maximum could not exceed 87% of the ceiling placed on the GSEs or go lower than 48% of that ceiling. In February 2008, however, Congress changed the formula in an effort to mitigate the economic downturn by temporarily setting the limit at 125% of the area median but not to exceed 175% of the GSE limit of $417,000. Five months later, though, lawmakers changed the rules again when they passed the recovery act, this time by assigning the task of setting the conforming loan limit to the newly created FHFA.


FHA Super Jumbo Loans


The housing boom a few years ago really drove up home prices and the need for super jumbo loans became evident. FHA jumbo loans have become quite popular in states like California, Florida, Virginia, Maryland, DC and Connecticut. Any Over the last few years, HUD has become more accommodating to borrowers in high cost regions who need mortgages that exceed the FHA loan limits.  In most cases, getting approved to refinance FHA loans is not as difficult has non-conforming loans that most traditional lenders are offering.

What is a Super Jumbo Loan?  Mortgage professionals consider any loan amount over $650,000 to be a super jumbo. They also consider any loan insured by the Federal Housing Administration that is greater than $417,000 to be a FHA super jumbo.

What to Expect – Many homeowners have found that jumbo mortgage refinance programs are not as accessible as they were just a few years ago.  The reality is that the secondary mortgage market has strayed away from jumbo lending and private money sources have tightened their requirements significantly. These non-conforming loans typically are offered at a higher interest rate and more equity is sometimes needed for FHA refinancing.


Will 2011 FHA Loan Limits Drop?


Many are surprised at the discussions regarding FHA loan limits being reduced in 2011.  If HUD and Congress decide to lower the loan limits it could have a dramatic effect on many homeowners in high cost regions in many states that currently have access to government home loans.  Todays FHA mortgage rate remains under 4% on fixed 30-year terms.

A few years ago, in an effort to revive the sluggish housing sector, Congress voted favorably for FHA, Fannie Mae and Freddie Mac to support home mortgages as high as $729,750 in high cost regions. The raised mortgage limits were significantly higher than the standard maximum loan amount of $417,000.  The Wall Street Journal reported that without an extension on the higher FHA loan limits, that the $729,750 level would likely drop to $625,500 in 2011. However there may be another obstacle— FHA loan limits in even more counties could be reduced because of temporary extensions that enabled FHA to insure jumbo loans. There’s a nationwide ceiling for FHA loan limits, which is set at $271,050 and this is well below the $417,000 limit that is used for Freddie Mac and Fannie Mae.

  * FHA Rates at Record Lows!* FHA Streamlines Require No Equity* FHA Short Refinance Reduce Principal Balances for Underwater Mortgages* Higher FHA Loan Limits Help Borrowers in High Cost States

WSJ noted that “most counties are somewhere between the floor and the ceiling, because 2011 FHA loan limits vary by region as they are targeted to meet local median home prices. Under existing law, those limits are set at 115% of the local median price; under the expanded loan limits that are currently in effect, the limits are set at 125% of the local median price. The current loan limits are also higher because they’re set using housing bubble-era median prices, which are significantly higher than today’s prices that would be used to recalculate the new loan limits. This means if Congress doesn’t again extend the higher limits, they’ll be starting from a much lower level next year, and the multiplier effect—115% versus 125%—will be lower, too.  The FHA mortgage market continues to increase its market-share so clearly the consumer demand remains strong for FHA loan programs.

According to the White House, the Obama administration supports extending the FHA loan limits for another year for these reasons.  The FHA’s commissioner, David Stevens said, “We’re not talking about wealthy millionaires. We’re talking about the average American’s ability— to finance a home.”

The National Association of Realtors says that nearly 20% of U.S. counties—including almost the entire state of California, would see FHA loan limits fall in 2011 if the current extension expires. The FHA mortgage limits don’t expire until the end of the year, but the real-estate industry is anxious for Congress to pass an extension soon because banks aren’t going to wait until December 31st, 2010.

The Wall Street Journal reported that the consensus estimated from MacroMarkets LLC survey of 114 economists is that house prices will only increase by 0.8% in 2011. This means that home prices by the end of next year could remain where they were at the end of 2009.

It remains to be seen what will be done for 2011 FHA loan limits.  Lowering the  loan limits could back-fire and actually increase foreclosure rates, because many struggling homeowners in high cost regions would not be able to refinance into a more affordable payment. We know that lower monthly payments reduce the foreclosure rates so maybe HUD and Congress will come to their senses and do the right thing.

Loans for People with Poor Credit!      Home Buying with Bad Credit FHA Loan Rates have fallen below 4% on fixed rate mortgages!


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