New Mortgage Rules & Loan Limits

The mortgage business is one that is in constant flux with the governement, regulators, and lenders trying to fine tune the mortgage market so that we never have another mortgage-implosion like we did late in the last decade. The one constant in today’s mortgage market is change. Like they say another day another new or changed mortgage guidline from Fannie-Mae, Freddie-Mac, FHA, CFPB, or Dodd-Frank.

One of the changes that affect those consumers seeking a mortgage are mortgage loan amount limits, or the maximum loan amount that a particular agency will allow a consumer to borrow. FHA has their own mortgage limits, along with Fannie-Mae and Freddie-Mac having a seperate mortgage loan limit than FHA limits on a mortgage.

For this post we will concentrate on the FHA mortgage loan limits. These limits are set by HUD Housing Urban Development and FHA Federal Housing Authority. The new limits stem from teh Housing and Economic Recovery Act of 2008 or HERA for short. New limits are geographically based and vary by county. There are certain “high-cost’ mortgage areas like California, and Hawaii that have much higher limits than the majority of the country. They have been wanting to lower loan limits to avert another housing crisis.

It’s our opinion that loan limits are not what caused the crash, it was lowered underwriting standards to increase homeownership rates nationwide. As long as someone meets the new stringent mortgage qaulifying guidelines the amount of the loan is not a critical piece. If that were the case the highest amount of defaults would be jumbo loans, who actually have some of the lowest default rates. Furthermore, VA allows the same mortgage loan limits as Fannie-Mae and Freddie-Mac up to $417,000 and they have the lowest mortgage default rates of any class of mortgage products.

That being said perhaps HUD Housing Urban Development and FHA Fair Housing Authority have seen the light as the mortgage loan limits for an FHA mortgage have remain unchanged from the 2013 mortgage loan limits.

As we said in the begining of this post the one constant in today’s mortgage market is change even when the change happens to be no change at all, at least for this year’s FHA mortgage loan limits.

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