FHA And The Stimulus Legislation

125% INCREASE.

The legislation allows increases in the loan limits for FHA and the GSEs to 125 percent of the median house price in the area of the property. Under the legislation, these increases cannot exceed 175 percent of the current GSE loan limit of $417,000 (up to $729,750) for a single family property.

UP TO $100,000 MORE FOR FHA.

The Secretary of HUD also has additional discretionary authority under the legislation to increase the FHA loan limits for particular residences or areas by up to $100,000. The legislation requires HUD to publish revised median house prices and principal obligation limits to implement the legislation "as soon as practicable" and we understand it will move to do so within weeks after the bill is signed.

WHY FHA WILL OFFER MORE RELIEF.

FHA insured mortgages represent a viable alternative to conventional mortgages. Below are some characteristics of the program that make it an attractive choice:

1. Credit scores as low as 580. Conventional mortgages require a minimum of 680,
2. Cash-out refinancing allows you to borrow up to 95% of the appraised value,
3. Minimum equity 3%.,
4. No cash-out refinance and purchase up to 97% of the appraised value.

The increase will bring more borrowers to FHA insured mortgages due in part to more flexible guidelines.

Contact John Palla at jpalla@panamlending.com