The change in FHA's loan limits can help you to achieve the American Dream, homeownership.
As part of the Economic Stimulus Act, FHA has been allowed to temporarily raise their loan limits. FHA will now insure loans up to 125 percent of an area's median house price.
The purpose of the increased loan limit is to provide buyers affordable mortgage loans and to help current homeowners who are facing possible foreclosure via FHA's refinancing program FHASecure.
Due to the mortgage crisis many lenders have tighten their lending requirements to such a point that many qualified buyers have not been able to obtain financing. FHA has filled the void by providing loans to many of these buyers. The increased loan limits will allow them to help many more. FHA can help home buyers avoid subprime mortgage products like those that largely contributed to the current high rate of foreclosures and the mortgage credit crisis.
FHA also offers a program 203K (SF Rehabilitation Loan) which allows buyers to buy homes (single-family) that need some rehabilitating and repairs. This loan program offers a mortgage loan which combines both the mortgage and the cost of repairs into one loan. A major advantage of this loan program is that you can buy a home and do the repairs after your escrow closes.
Please remember that the key word here is: temporarily. On December 31, 2008 the new loan limits will revert to the previous limits unless Congress approves legislation to make the new limits permanent as part of the FHA Modernization bill which is currently waiting approval.
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