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U.S. FHA Will Lower Loan Limits in 2014

Encouraging and interesting article about FHA changing their loan limits. Our market is one of the few with the high FHA loan limit, and certainly the scaling back of this number is indicative of the government’s faith in the housing market. Although on the surface this would seem to harm housing prices and demand, there is really a very small number of people who get FHA loans over 625K now. Ultimately, this will have a limited affect.

To summarize, the will limit the size of the loans it backs to a maximum of $625,500 at the beginning of 2014. Currently, the FHA’s limits vary by region, from $271,050 to $729,750. With an FHA loan, buyers can still make a down payment as little as 3.5%.

The article from Reuters quotes the FHA commission as saying:

“As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play,” Carol Galante, FHA Commissioner, said in a statement. “Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market.”

To see the full article from Reuters click here.

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