The Federal Housing Administration (FHA) has announced on December 1, 2016 that there will be an expected increase on the loan limits for particular counties in the country.
This increase is brought by the steady rise of property values over the recent years. The FHA recalculates the loan limits in an area annually. This is based on the 115% of the median home value per county. For areas situated in a Metropolitan Statistical Area (MSA), the limit of all areas shall be-be calculated on the highest cost county.
The increase in home value in the market has made it difficult for homebuyers to look for a property that may fit well within the maximum loan limits set by the FHA. To keep up with this increase, FHA will have the new and increased loan limits come January 1, 2017 and shall be effective until the next year ends.
The FHA has raised the “ceiling” caps in high-cost areas as well as the “floor” of the FHA loan Limit on low-cost counties. This increase applies to almost 3000 counties, while around 290 will have maximum limits rolled over from this year towards the next.
It should be emphasized that there is no decrease in the ceiling or floor loan limits in any area. The floor limit for a one-unit property size, the low-cost floor cap is now $271,050. For the high-cost ceiling cap, it has risen to $636,150 from $625,500.
As it has always been, the FHA insures the home loan. The actual loan is funded by a third-party lender. It case the borrower pushes the property to foreclosure ending to a loan default, FHA covers the damages done towards the lender. The FHA sets limits on the maximum amount that it insures, depending on the county.
The aim for this increase is to help potential homebuyers to afford housing costs and bring more families into their own homes by widening the coverage of the loan limits relative to the current home values in the market today. For a complete list of increased 2017 FHA loan limits, Click Here. Verify with an FHA-approved lender in your area for more information.