Secretary Martinez had very good news in the New Year for hundreds of thousands of families: he announced that the Federal Housing Administration (FHA) has increased its single-family home mortgage limits by more than seven percent.

Effective on January 1, 2003, FHA will insure single-family home mortgages up to $280,749 in high cost areas, and up to $154,896 in lower cost areas. In addition, the first day of the New Year also brought increased loan limits for two-, three- and four-unit dwellings. FHA has sent letters about the higher limits to thousands of mortgage lenders and brokers, and how they can help homeowners.

"The Bush Administration is committed to creating 5.5 million new homeowners by the end of the decade, and increasing the supply of affordable housing is the key to making the dream of homeownership a reality for more people," said Martinez. "These new loan limits will further contribute to this effort in 2003 by expanding homeownership opportunities for many more families while helping the FHA mortgage insurance program to keep pace with the robust housing market."

FHA-insured loans are especially popular for low-income and first-time homebuyers because the agency requires only a three-percent down payment.

Four years ago, the loan limits ranged from just $115,200 to $208,800, levels below the cost of many homes in many communities. As a result, families who needed FHA mortgage insurance to qualify to buy a home were effectively locked out of the process. The higher FHA loan limits do not add additional costs to the government, because the FHA Insurance Fund is fully supported by premiums paid by borrowers.

The increases will also benefit senior citizens who qualify for FHA-insured reverse mortgages. Reverse mortgages allow homeowners age 62 and older to borrow against the value of their homes without selling them. Homeowners can select a lump-sum payment, monthly payments or tap into a line of credit. No repayment is required as long as a homeowner lives in a home with a reverse mortgage. The reverse mortgage is repaid, with interest, when a homeowner sells the home or dies.

Find the new, increased FHA mortgage limits (https://entp.hud.gov/idapp/html/hicostlook.cfm) for your area.