Mortgage Daily

Published On: December 22, 2003
HUD Multifamily Limits to Rise

American Dream Downpayment Act enable 30% increase

December 22, 2003

By MortgageDaily.com staff

New multifamily loan limits were approved with the passage of the American Dream Downpayment Act.

According to the bill President Bush signed Tuesday to assist families with down payment and closing costs, multifamily loan limit provisions were also included. The changes will apply to federally insured mortgages that support construction of affordable multifamily housing in the nation’s high-cost urban and suburban areas. These include loans for the construction and rehabilitation of rental housing insured under Section 207, cooperative (213), moderate-income (221) and condominium (234) housing, as well as, housing for the elderly (231) and in urban renewal areas (220).

Under the new rules, the maximum amount the Federal Housing Administration will finance for multifamily mortgages will increase from 110% of the median sale price to 140%. In high cost areas, the limit will increase from the current 140% of the median sale price to 170%, said a spokesman for the U.S. Department of Housing and Urban Development (HUD) — the branch FHA operates under.

According to the spokesman, HUD’s Office of General Counsel needs to study the legislation to determine the actions needed to implement the changes. The effective date of the loan limits will be based on that determination.

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