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The Federal Housing Administration (FHA) has announced the agency’s news schedule of loan limits for 2015. These loan limits are effective for case numbers assigned on or after Jan. 1, 2015, and will remain in effect through the end of the year. FHA’s calculation for maximum loan limits in high cost metropolitan areas of the country will remain the same as the 2014 level of $625,500. The current standard loan limit for areas where housing costs are relatively low will also remain unchanged at $271,050.
Each year, FHA recalculates its national loan limit based on a percentage calculation of the national conforming loan limit. Depending on those limits, FHA’s minimum national loan limit “floor” is at 65 percent of the national conforming loan limit. The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.
Conversely, any area where the loan limit exceeds the “floor” is considered a high cost area. The maximum FHA national loan limit “ceiling” is at 150 percent of the national conforming limit. In areas where 115 percent of the median home price (of the highest cost county) exceeds 150 percent of the conforming loan limit, the FHA loan limits remain at 150 percent of the conforming loan limit.
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. Additional information and loan limit adjustments for two-, three-, and four-unit properties, and in Special Exception Areas, are noted in FHA’s Mortgagee Letter 2014-25.
The mortgage loan limits for FHA-insured reverse mortgages will also remain unchanged. The FHA reverse mortgage product, 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. Reverse mortgages allow homeowners age 62 and older to age in place by borrowing against the value of their homes without any requirements for monthly payments; no repayment is required as long as a homeowner lives in the home. The reverse mortgage is repaid, with interest, when the homeowner leaves the home.