New FHA Loan Limits
Looking to get an FHA Loan in 2014 and beyond? HUD ( Department of Housing and Urban Affairs) announced last week it will be lowering the maximum loan amount for FHA loans (Federal Housing Administration). The new limits will take effect Jan. 1.
Each county across the county has a maximum loan amount, which is tied to the areas average income. The standard FHA loan limits for areas with relatively low housing costs will stay at its current level, $271,050. However, the limit for areas with the highest housing costs will be reduced by more than $100,000, from $729,000 to $625,500.
To learn what is available in your area
Use this FHA Loan Amount Lookup Tool. Be sure to click the CY2014 for the new limit
The current limits have been in place for the past six years, and were originally set to lower in 2009, but were left alone because of the real estate crash.
Loan limits for FHA-insured reverse mortgages will remain the same at a maximum amount of $625,500, with actual loan limits based on the value of the property, current interest rates and the borrower’s age.
While not for just first time home buyers, they are wildly popular with first time buyers because they only require a down payment of 3.5%. That down payment can be their own money, a gift from a family member (like Mom and Dad), or from a down payment assistance program.
FHA loans also allow for a little weaker credit profile, and you can even use one to buy a house needing repair, and get the money to fit it up all in one loan. That is known as the FHA 203(k) rehab loan.
FHA loans are not perfect. They also come with some of the most expensive mortgage insurance of all mortgage loans.