The U.S. Department of Housing and Urban Development, or HUD, provides the Federal Housing Administration, or FHA, insurance plan that allows home buyers to obtain mortgages with lower down payments and closing costs. The amount of money a home buyer may borrow using an FHA loan is restricted by the FHA rules. Prospective home buyers should be aware of the FHA loan limits for their area if they plan on utilizing FHA insured financing.

Function

The maximum FHA loan amounts have been set by the Federal Housing Administration following the rules set from the Economic Stimulus Act of 2008 and the Retrieval and Reinvestment Act of 2009. In 2010, the FHA was using the loan limits set in 2009 to meet the needs of the law. The result of the execution of these laws is a vast array of FHA loan limits for various areas of the country.

Loan Limit Floors

The FHA has a floor amount for various loan limits. The floor amount is the cheapest the FHA loan limit can be for almost any area of the country. Loans can be obtained for properties with one to four components. The limitation that is most widely used is for a single family dwelling. The flooring limits for FHA loans in 2010 are: Single-Unit Property: $271,050. Two-Unit Property: $347,000. Three-Unit Property: $419,400. Four-Unit Property: $521,250. In areas of the U.S. with low-cost home, these will be the FHA loan limits.

Loan Limit Ceilings

After applying the rules of both legislation impacting FHA limits in high-cost areas, the maximum constraints or ceiling for FHA loans from the continental U.S. would be the following: Single-Unit Property: $729,750. Two-Unit Property: $934,200. Three-Unit Property: $1,129,250. Four-Unit Property:$1,403,400. Nearly All areas at the highest limit are at the high-cost countries of New York, Massachusetts, Virginia and the San Francisco Bay area. The FHA has released even higher limits for some areas of Guam, Hawaii and Puerto Rico.

Factors

FHA loans are all available for purchase and refinance of owner-occupied properties. You can come across the FHA maximum loan amounts for almost any area utilizing the site provided by HUD. Look up the constraints by county, state and also what HUD calls MSA, or metropolitan statistical area. If you sort San Francisco to the MSA block, the page will return the FHA limits for the chosen city. In 2010, the FHA limitation in San Fransisco was $729,750 for a single-unit property.

Possible

In case the amount of the loan for a home purchase or refinance is below the FHA limit for the property’s location, FHA-insured financing can be obtained for up to 96.5% of the house’s worth. This means that a mortgage meeting the FHA limits requires a deposit amount of 3.5 percent of the price or value. This low down payment level makes it easier for first-time home buyers to qualify for a loan and buy a home.

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