As 2017 begins, many people are making resolutions to get in shape, quit bad habits or finally achieve their most longed-for goals. One such goal may be to own a home. Year after year, millions of Americans hope to make the American Dream of owning property a reality, by becoming homeowners.
Well, this goal may be even easier to achieve, thanks to the FHA’s plan to increase its loan limits for 2017. With higher loan limits, buyers in areas where real estate prices are on the rise may still be able to take advantage of low money down financing through FHA mortgage programs.
Why the Increase?
As home values continue to grow, prices for residential real estate have increased. This trend has helped influence the decision-makers at the FHA to adjust the current loan limits, so they remain in line with today’s market and continue to make homeownership more affordable.
Here is a breakdown of the changes:
The loan limit increases are effective on FHA loans with case numbers assigned on or after Jan. 1, 2017. The increases will remain in effect through the end of the year.
The FHA recalculates loan limits on a yearly basis to determine if adjustments are needed. The limits are based on a percentage calculation of the nation’s conforming loan limit, which currently stands at $424,100.
The FHA has increased its “floor” limit from $271,050 to $275,665. This is 65% of the national conforming loan limit of $424,100. The FHA says the “floor” limit applies to areas where 115% of the median home price is less than 65% of the national conforming loan limit. Any area that doesn’t fit this calculation—and the loan limit exceeds the “floor”—is considered a high-cost area.
Middlesex County, CT is considered a high-cost area, and thus the FHA “floor” limit of $275,665 does not apply.
The maximum FHA loan limit “ceiling” for high-cost areas is 150% of the national conforming loan limit, or $636,150 (previously $625,500).
In Middlesex County, CT, the FHA loan limit is $353,050 for a one-family home. For two-family, three-family and four-family homes, the FHA limits for Middlesex County, CT are $451,950, $546,300 and $678,950, respectively.
The maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), also known as reverse mortgages, will increase to $636,150, or 150% of the national conforming loan limit of $424,100.
For more information on FHA loan limits in your area, please contact us to discuss your home financing needs.