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Home Mortgage Preparation :: FHA Loan Limits
FHA Loan Limits:
What FHA Loan Limits Mean to You
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What is the FHA?
Okay, if we are going to discuss what FHA loan limits are; we first need to know what the FHA is. The letters stand for the Federal Housing Administration, and it is a government program aimed at helping people get into a home of their own.
Nowadays, it is known as the Department of Housing and Urban Development (HUD), but it was founded back in 1934. It had two objectives back then: help people buy a home with a minimal down payment, and at the same time protect the lender’s investment.
After all, people who cannot get a loan from a regular bank are generally those who are at a high risk of defaulting. Over the years, the administration has helped a great many low-income families get the homes they have always wanted. It is said that getting a person into a home goes a long way toward making them feel a part of their community.
However, the one problem with the administration has been that the FHA loan limits tend to lag behind the current home prices. Whereas firms like Fannie Mae and Freddie Mac, being in the private sector, tend to keep pace with the market.
What is the Loan Limit?
So, with housing as the FHA’s goal, it had to set some limits as to what size loans it would allow. Basically, the FHA loan limits are set up on a regional basis, and they define how large of a mortgage the administration will underwrite.
Just recently, the government moved to raise the FHA loan limits. In fact, the Senate just voted on the bill, and by a vote of ninety-three to one, it passed. Now the bill goes on to the House of Representatives, and then on to President Bush for signing. It is hoped that it gets approved; considering that the FHA loan limits have not been raised in a number of years.
So, if you feel your income is not high enough for a regular mortgage, you can try for one from the FHA. Even if the FHA loan limits are not raised, you still have a very good chance of getting a fine home.
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