New year marks rise in loan limitsMortgagePress.comLoan limits rise
The Office of Federal Housing Enterprise Oversight (OFHEO) has
announced that the maximum 2006 conforming loan limit for
single-family mortgages purchased by Fannie Mae and Freddie Mac
will jump nearly 16 percent to $417,000. The nearly $60,000
increase from 2005's limit of $359,650 is one of the largest on
record and will allow as many as half a million more borrowers to
lock into rates that are 25-50 basis points lower than those
offered in the jumbo sector. The increase in conforming loan limits
is based on the October to October changes in the average home
sales price, as published by the Federal Housing Oversight Board
(FHFB), and on supervisory guidance issued by OFHEO. The FHFB's
figures are derived from its monthly survey of lenders, a survey
including both new and existing home sales.
The 2006 conforming loan limits are as follows:
Single-family--$417,000
Two-family--$533,850
Three-family--$645,300
Four-family--$801,950
The increases will affect two reverse mortgage products: the
federally insured Home Equity Conversion Mortgage (HECM), which
accounts for 90 percent of all reverse mortgages made in the U.S.,
and the Fannie Mae Home Keeper loan.
The loan limits for the HECM product vary by geographic area.
The highest of the loan limits will grow from $312,896 to $362,790.
The lowest loan limit, which generally applies to rural and
non-metropolitan areas, will grow from $172,632 to $200,160.
"These increases in the loan limits for the HECM and Home Keeper
products will enable seniors to access greater amounts of equity in
their homes, providing a powerful tool for addressing their
financial needs through retirement," said Peter Bell, president of
the National Reverse Mortgage Lending Association.
Approximately 79.8 percent of the 3,226 counties (2,575) in the
U.S. are currently at the lowest HECM loan limit ($172,632). Only
104 counties, or 3.2 percent of the total, are at the current
maximum loan limit of $312,896. The balance is somewhere in
between. While counties at the "floor" are guaranteed to rise from
$172,632 to $200,160, there is no guaranty that counties at the
current "ceiling," or in between the floor and ceiling, will rise
immediately.
The ceiling on loans insured by the FHA will also increase in
2006 to $362,790 in approximately three-dozen high-cost markets.
The FHA maximum loan amount in most other places will be about
$200,160. FHA loan limits for individual counties may vary between
the base and the high-cost, depending on the median housing price
for that county or MSA.
In addition, the maximum no-down-payment loan that will be
guaranteed by the Department of Veterans Affairs will be $417,000
in 2006. Eligible veterans can still purchase higher-priced houses,
but because the VA guaranty is accepted by some lenders as a
substitute for a 25 percent down payment, buyers will have to put
up $1 of their own money for every $4 they want to borrow above the
limit.
The 2006 FHA loan limits are indexed on the 2006 conforming loan
limits, with the base and high-cost limits expected as follows:
--------------------Base-----High-cost
Single-family $200,100 $362,790
Two-family $256,248 $464,449
Three-family $309,744 $561,411
Four-family $384,936 $697,696
For more information, visit www.ofheo.gov, www.nrmla.org and www.va.gov.
