January 14, 2000
Washington In a move that will help thousands more families become homeowners each year, Housing and Urban Development Secretary Andrew Cuomo today announced that HUD has begun insuring larger home mortgage loans across the country up to nearly $220,000 in some area for single-family homes. In San Diego County HUD will ensure mortgage loans up to the top limit of $219,849.
Cuomo said that on Jan. 1, HUD began insuring mortgage loans for single-family homes ranging from a limit of $121,296 in communities where housing costs are relatively low, to a limit of $219,949 in areas where housing costs are high. That's an increase from 1999, where HUD insured single-family mortgage loans with limits ranging from $115,200 to $208,800.
The mortgage insurance is provided by the Federal Housing Administration (FHA), a division of HUD.
"These higher loan limits will help create more homeowners, more home construction, more jobs, and more economic growth," Cuomo said. "They will transform the American Dream of homeownership into a reality for families across sour nation."
The new loan limits are part of a regular annual adjustment HUD makes to account for rising home prices. Under federal law, the loan limits are indexed to the conforming loan limits of Freddie Mac and Fannie Macfederally charted corporations that buy and package mortgages. This is the first nationwide increase in the loan limits since January 1, 1999.
The higher FHA loan limits are expected to help drive the nation's homeownership rate beyond its current record high of 67 percent of all households. Today 70.5 million American families own their homes more than at any time in American history, and 8.7 million more than when President Clinton took office in 1993, when the homeownership rate stood at 64 percent.
Cuomo said the higher loan limits will particularly benefit first-time homebuyers and minority homebuyers. Eighty percent of FHA loans go to first-time homebuyers. FHA insures about 40 percent of all home mortgage to African American and Hispanic homebuyers.
The higher loan limits will also apply to FHA's 203(k) Rehabilitation Program, which offers homebuyers an FHA-insured mortgage to finance both the costs of purchasing and repairing homes in older urban areas.
The increase in FHA mortgage loan limits will also benefit senior citizens. Under the increase, many senior citizens can now qualify for larger FHA-insured reverse mortgages-enabling some individual homeowners to borrow thousands of dollars in additional funds.
FHA does not make mortgage loans directly, but rather insures loans made by private lenders to homebuyers. FHA insurance guarantees the lender timely payment of principal and interest, in the event the homebuyer defaults on the loan.
Because FHA mortgage insurance protects lenders from losses, it has enabled millions of Americans who would otherwise be locked out of the mortgage market and homeownership to qualify for mortgages.