The Federal Housing Administration (FHA) announced that limits on "conforming loans" — mortgage loans which conform to guidelines of government-sponsored enterprises like Fannie Mae and backed by the federal government — will remain largely unchanged next year.
The FHA has established "ceilings" and "floors" for forward loan amounts which depend upon geographical region and if an area is regarded as "high cost" or "low cost."
Thus, in "high-cost" metropolitan parts of the country like New York, the maximum loan for a one-unit residence will remain unchanged at the $625,500 figure from 2014.
This means that the federal government will purchase and guarantee no loans from private lenders that exceed $625,500 in value.
The loan limit for one-unit residences in "low-cost" areas will also remain unchanged at $271,050.
The Agency explained that the minimum FHA national loan limit 'floor' [$271,050] is at 65% of the national conforming loan limit — which is $417,000 for a one-unit property for calendar 2015.
The maximum FHA national loan limit "ceiling" [$625,500] is at 150% of the aforementioned national conforming loan limit.
Limits on insured reverse-mortgage loans [otherwise known as the Home Equity Conversion Mortgage (HECM)] will also remain unchanged, with the maximum claim amount capped at $625,500.
HECMs are designed for homeowners aged 62 or above who have paid off their mortgages (or paid down a substantial amount) and currently living in the home. Under this program, elderly people can convert their home equity into cash. The mortgage is repaid only when the owner leaves their residence.
Mary Dunn, senior vice president and deputy general counsel of CUNA, told Credit Union Journal that the unchanged loan limits are positive for both borrowers and credit unions in that the limits "were not lowered because folks buying a house will have more options in terms of paying for the house."