Limit on Some FHA Home Mortgages Is Raised Sharply
The Department of Housing and Urban Development on Friday raised the ceiling on single-family mortgages backed by its Federal Housing Administration to $124,875 from $101,250 in a number of areas with high housing costs.
The increase in the cap, which mostly affects communities on the East and West Coasts, was called for in recently enacted legislation as part of an effort by Congress to make FHA loans available to middle- and moderate-income families in high-cost housing areas.
The increase will remain in effect only through Oct. 1 unless Congress acts to extend the legislation requiring the boost. FHA loans generally carry a more favorable interest rate than market-rate bank mortgages and often also require a smaller down payment than market loans.
The standard FHA mortgage limit is $67,500; the new $124,875 is 185% of the standard cap--the maximum allowed under the legislation for high-cost areas.
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