The Federal Housing Administration increased loan limits in counties all over the USA for 2018. Increased loan limits mean many potential homeowners got an early holiday gift from the FHA.
The increases are tagged for case numbers that specified on or after Jan. 1, 2018. Palm State Mortgage Company is delighted with this announcement. We’re happy because in some cases the increase in loan limits means families who might have hesitated will be encouraged to embrace the joys of home ownership in 2018.
FHA Loan Limits and What they Mean
Let’s begin with an official meaning of the term loan limits.
Palm State Mortgage Company wants you to understand that the FHA “has a maximum loan amount that it will insure, which is known as the FHA Lending limit.” These loan limits are calculated and updated annually and are influenced by the conventional loan limits set by Fannie Mae and Freddie Mac.
The type of home, such as single-family or duplex, can also affect these numbers.
As we always do, Palm State likes to establish the numbers. You see, the “FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008, to set Single Family forward loan limits at 115% of median house prices, subject to a floor and a ceiling on the limits.”
1. Typically, the FHA calculates mortgage loan limits by Metropolitan Statistical Area and county.
2. Then, as it was recorded, back in 2016, the FHA increased loan limits for just 188 counties.
3. Progress marched forward, and in 2017, the group enjoying increased loan limits expanded to 2,948 counties.
4. Since history has proven the plan works, 3011 counties will get increased loan limits as of Jan 1, 2018.
Increasing Loan Limits: a Practical Gift that Keeps on Giving
To Palm State Mortgage this makes perfect sense because of the rising costs of homes. As writer Ben Lane reported in Housingwire, “The FHFA’s third quarter 2017 House Price Index report, which includes estimates for the increase in the average U.S. home value over the last four quarters, showed that house prices increased 6.8%, on average, between the third quarters of 2016 and 2017.”
1. A Difference in the Ceiling: In the loan limiting high-cost areas, the FHA’s loan ceiling will increase to $679,650. For 2017, it was $636,150. This is enough of an increase to be substantial. Some families will be able to move closer to an area where they work. They might be better able to finance a home in a neighborhood where they prefer the school district.
2. A Difference in the Floor: The floor figure will also increase. In 2017, the floor of the loan limit has been $275,665. In 2018 it will increase to $294,515 in 2018. When it comes to buying a house, this might make the difference so a family can have an extra home with a better-built kitchen, an extra bathroom, or a little more square footage.
A Few Counties have Loan Limits that are Exceptions to the Increases:
We must also realize that in 223 counties, the FHA loan limits will stay flatly, as they are. They will remain the same. It appears that some counties were simply left off the gift list.
What Happens to Increases in Loan Limits When You Go in Reverse?
The National Mortgage Limit for FHA-insured Home Equity Conversion Mortgages, also termed “reverse mortgages,” will also increase. In 2018 the limits are going up from $636,150 to $679,650.
At the present time, the Federal Housing Authority Act does not permit loan limits for reverse mortgages to vary. They are not governed individually by MSA or by county. Therefore, the loan limit stated above applies to all mortgages.
The Federal Housing Authority has set the minimum national loan limit, at 65% of the national conforming loan limit of $453,100.
Major Point A: This floor goes into effect in the areas where 115% of the median home price is less than the actual floor limit.
Major Point B: The Federal Housing Authority designates any areas “where the loan limit exceeds this floor is considered a high-cost area”. Therefore, HERA requires FHA to set its maximum loan limit ceiling for high-cost areas at 150% of the national conforming limit.”
Find counties at the ceiling loan limit at on an official listing. Likewise, you can You can check out a list of the areas that fall between the floor and ceiling loan limits before you make a big move to an area.
Mortgage Limits Page at the Federal Housing Authority: Transparency
Did you know there is a mortgage limits page directly overseen by Secretary Ben Carson? This is where you can send for specific loan limit information relative to a certain area? Plus, you can even discuss it with a Single Family Administrator.
Caution: There is A Lot to Learn about FHA Loans
One caveat from Palm State Mortgage Company is that in spite of sounding like good deals, there are quite a few details involved with choosing FHA loans. For example, if you have a good down payment, you might get a better loan payment situation with a conventional loan.
So, do your loan type homework, and remember, Palm State is here to help.
As we turn our thoughts and energies toward holiday shopping, preparations for family visits and gifting of our own here in Orlando, we cannot help but feel optimistic about the coming New Year. You can see it in the statistics, and you can see it shining in the eyes of children as they anticipate the joys of the season.