The new FHA and Fannie Mae- Freddie Mac conforming loan limits have been released by the U.S. Department of Housing and Urban Development.
This is particularly dramatic in the Philadelphia Area:
Just Announced Today……
FHA Loan Limit Increases Are Official:
BUCKS CO./MONT. CO./PHILADELPHIA CO./DELEWARE CO./CHESTER CO. ----- NEW- $420,000
This is up from the previous limit of lower $200,000's. In the past 24 years of being a Realtor, FHA loans were primarily of use only for lower to lower-middle income buyers. They are great loans because they only require 3% down, rates are great, and they are insured by HUD. This means that many more properties will be eligible for FHA financing and more buyers will be able to afford them. Qualifying standards are sometimes easier for FHA vs conventional loans as well. By the way, conventional loans are those that are not either VA or FHA. The latter two having connections to the Federal Government. FHA loans are insured (for the benefit of the lenders that grant these loans) and VA loans are guaranteed by the Veteran's Administration. Different words, and slightly different meanings. Conventional loans have neither and with low down payments, usually require "private mortgage insurance". If his all sounds confusing to you, please send me an email. email@example.com. Thanks!!
We expect the impact of these loan limit increases on the housing market to be significant because of the infusion of capital into the mortgage market, which should result in lower interest rates across the board. In addition, there will be a direct impact on high-cost areas that previously required borrowers to take out costlier jumbo mortgages. As NAR (Natl Assoc of Realtors) research points out, increasing FHA loan limits will help an additional 138,000 Americans achieve the dream of home ownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home. In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will bolster the housing finance market, which continues to be severely stressed, by providing an immediate infusion of much needed liquidity to the nation’s mortgage market. An economic impact study conducted by NAR in January 2008 estimated that increasing the GSEs’ conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced and home prices would be strengthened by two to three percentage points.