January 22, 1999

Cuomo Announces Higher FHA Home Mortgage Loan Limits to Help More Families Across Nation Become Homeowners

Washington — In a move that will help thousands more families become homeowners each year, Housing and Urban Development Secretary Andrew Cuomo announced that HUD has begun insuring larger home mortgages to keep pace with rising home prices.

Cuomo said that HUD began insuring home mortgages loans on January 1 of up to $115,200 in communities where housing costs are relatively low and loans ranging up to $208,800 in communities where housing costs are higher.

This is the second increase in the loan limits since October. The mortgage insurance is provided by the Federal Housing Administration (FHA), a division of HUD.

"This is good news for many hard-working families across our country, because it will give them the opportunity to become homeowners," Cuomo said. "Since 1934, FHA mortgages have transformed homeownership from a distant dream into a sweet reality for more than 27 million American families. Higher FHA loan limits will create a higher homeownership rate that will benefit families, create jobs and strengthen our nation's economy."

Before the October increases took effect under a bill signed into law by President Clinton, the loan for FHA mortgage insurance ranged from just $86,317 to $170,362 —below the cost of most homes in many communities. As a result, many families who needed FHA mortgage insurance to qualify for a home purchase were effectively locked out of homeownership.

In October, FHA mortgage loan limits jumped to a range of $109,032 in low-cost areas to $197,621 in high-cost areas under the legislation sought by the Clinton Administration. HUD raised the loan limits again January 1 based on an increase in the size of home mortgages available for purchase by Freddie Mac, a federally chartered corporation that buys and packages mortgages.

Cuomo said HUD is ending letters to thousands of mortgage lenders and mortgage brokers around the country to make them aware that the higher FHA loan limits can help their customers.

"We want everyone in the mortgage industry and every potential homebuyers to know that FHA is back in business, operating more efficiently and effectively, and doing more than ever to increase homeownership," Cuomo said.

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