Working in concert to meet a tight deadline, Congress and the White House have raised the FHA loan limit in high-cost real estate markets, including Los Angeles, making it easier to obtain an FHA loan on properties up to $729,750*.
Following passing votes in the House of Representatives and Senate, President Obama signed HR 2112, the Consolidated and Further Continuing Appropriations Act of 2012, into law, renewing the expired higher loan limits for Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loans for an additional two years, through December 31, 2013.
The limit to conforming loans was reduced to $625,500 on October 1, 2011, when a previous increase in conforming loan limits expired. With the passage of this legislation, the FHA loan limit has been restored to $729,750. While the loan limit has been increased for FHA loans, the increase does not affect limits for conventional loans backed by Fannie Mae or Freddie Mac.
Higher loan limits give borrowers another home-financing option to consider in all high-cost areas of the country, such as California and New York. Borrowers could take out a jumbo loan, which typically requires a larger down payment. They now have the option of using an FHA loan with a lower 3.5% down payment requirement.
Let’s discuss the exciting opportunities generated by higher FHA and VA loan limits combined with historically low interest rates. I am ready for your call!
*One-unit, primary, owner-occupied residences determined by HUD to be in high-cost areas.
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