FHA Loan Limits Increase for 2015

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Filed under: FHA Loans

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Last week, the Federal Housing Administration (FHA) announced its news schedule of loan limits for 2015. These loan limits will be effective for case numbers assigned on or after January 1, 2015, and will remain in effect for one calendar year.

According to the news release, FHA’s calculation for maximum loan limits in “high cost” metropolitan ares of the United States will remain the same as the 2014 level of $625,500. And, the current standard loan limit for areas where housing costs are low will also remain the same at $271,050.

In addition, the mortgage loan limits for FHA-insured reverse mortgages will remain unchanged. The Home Equity Conversion Mortgage (HECM) will continue to have a “maximum” claim amount of $625,500, with actual loan limits based on property value, borrower age, and current interest rates.

On a yearly basis, FHA “recalculates” its national loan limit, which is based on a percentage calculation of the national conforming loan limit. Then, depending on those limits, the FHA’s “minimum” national loan limit  determines the “floor,” which is at 65% of the national conforming loan limit. The “floor” applies to those housing areas where 115% of the median home price is less than 65% of the national conforming loan limit.

On the other hand, any housing area where the loan limit exceeds the “floor” is considered a “high cost” area. Here, the “maximum” FHA national loan limit “ceiling” is at 150% of the national conforming limit. And, in housing areas where 115% of the median home price (of the highest cost county) exceeds 150% of the national conforming loan limit, the FHA loan limits remain at 150% of the conforming loan limit.

Housing areas are eligible for FHA loan limits above the national standard limit, and up to the national “ceiling” level, based on median area home prices.

Also, borrowers with existing FHA insured mortgages may continue to use FHA’s Streamline refinance program no matter what their loan balance is.

If you have any questions about the mortgage industry and/or are interested in buying, selling, or refinancing your home, please feel free to call me and we can discuss whatever is on your mind.

Source: http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2014/HUDNo_14-152 

 

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