FHA Loan Limits Remain Unchanged for Reverse Mortgages in 2016

The national maximum claim amount for Home Equity Conversion Mortgages (HECMs) will remain unchanged in 2016 at $625,500, the Federal Housing Administration (FHA) announced Wednesday. Loan limits for forward mortgages, however, will increase in 188 counties next year.

FHA announced that it will maintain the current HECM loan limit through December 31, 2016, via Mortgagee Letter 2015-29 issued Wednesday afternoon. The $625,500 MCA is also applicable to Freddie Mac’s special exception areas in Alaska, Hawaii, Guam and the Virgin Islands.

On the forward lending side, FHA stated that it will continue to maintain its national loan limit “ceiling” of $625,500, and “floor” of $271,050 for areas considered to be “low cost.”

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Each year, FHA calculates forward mortgage limits, setting them at or between the low-cost area and high-cost area limits based on the median house prices for the area.

FHA sets the “floor” limit at 65% of the $417,000 national conforming loan limit, hence the $271,050 value. This floor applies to areas where 115% of the median home price is less than 65% of the national conforming limit.

Due to changes in local housing prices, FHA is increasing the maximum loan limits for forward mortgages only in 188 counties.

To view the loan limits in a particular area, visit the FHA’s Mortgage Limits page.

Written by Jason Oliva

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  • Since it is clear that the lending limit at $625,500 has shown no greater potential harm to the MMI Fund than at lower lending limits, then it would seem it should become permanent. We need less potential instability and greater stability in the HECM program. HUD needs to make this a permanent limit until such time as it is clearly too low.

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