Federal Housing Administration (FHA) mortgages are decreasing the maximum loan size allowed to $318,550 in 2009, from $362,790 in 2008, within the greater Twin Cities metro market. This may reduce the number of mortgages that can be financed on FHA purchase transactions. FHA mortgages have become one of the most common mortgage programs today. FHA's popularity has increased greatly in 2008 as the private Conventional mortgage market has steadily tightened their guidelines. This tightening has made it more difficult for some home buyers to secure Conventional financing, and FHA has picked up a lot of the slack. FHA loans are insured by the federal government.
FHA mortgages will also be requiring the minimum down payment on a purchase to be 3 1/2% starting on January 1, 2009. FHA had previously required home buyers to put a minimum of 3% into the transaction when buying a home. FHA still allows the down payment to come from either the buyer or their relative. It is a fairly flexible mortgage program in today's market place. In an ever-changing mortgage market, FHA has not been excluded from changes; however, few things have changed with FHA loans since the credit crisis began in 2007.
The FHA loan limit reduction to $318,550 for 2009 applies to one unit real estate properties. For two unit properties, the maximum loan size will be $407,800, three unit properties will be $492,950, and four unit properties will be $612,600.
Nick Sivertsen, Summit Mortgage, nick@nicksivertsen.com
