NEWS RELEASE

NEW YEAR RINGS IN HIGHER FHA HOME MORTGAGE LIMITS

The Federal Housing Administration (FHA) is increasing its single-family home mortgage limit by nine percent. Effective January 1, 2002, FHA is insuring single-family home mortgages up to $261,609 in Orange County areas. The FHA is sending letters to thousands of mortgage lenders and brokers to make them aware of the higher rates that can help families. The increase in loan limits will enable more working families to become homeowners and will help the FHA mortgage insurance program to keep pace with the robust housing market.
Homebuyers are attracted to FHA-insured loans because the agency requires only a three percent downpayment and permits family and friends to contribute to the initial home buying expenses. In addition, FHA has more relaxed credit standards and permits borrowers to carry more debt than private mortgage insurers typically allow. The increase in mortgage limits combined with benefits such as the reduction in FHA mortgage premiums announced last year makes FHA an even more attractive home mortgage product.
The higher FHA loan limits will not cost the government any money, because the FHA Insurance Fund is fully supported by premiums paid by borrowers who receive FHA insurance. With the new limits, HUD anticipates it will endorse $120 billion in single-family mortgages for 1.2 million homes in 2002, an increase of $14 billion and 200,000 homes over 2001 levels.