Government-insured mortgage limits have been increased, reflecting a recent increase in the maximum conforming loan amount.
The U.S. Department of Housing and Urban Development (HUD) announced last week that the loan limit on Federal Housing Administration (FHA) insured single-family mortgages will increase to a maximum of $280,749 in high cost areas. In low cost areas, the new limit is $154,896.
The annual FHA increase follows Freddie Mac and Fannie Mae's conforming loan limit increase, announced in November. The two government-sponsored housing enterprises will only purchase residential mortgages that fall within the maximum conforming loan amount, currently at $322,700.
By law, FHA loan limits are tied to the conforming loan limits.
Low-income and first time homebuyers are attracted to FHA-insured loans because the agency requires only a 3% down payment, HUD said in its announcement.
The FHA, which was consolidated into HUD's Office of Housing in 1965, was created by Congress in 1934 to help the country get back on the road to economic recovery.