HUD OKAYS 7.4 PERCENT INCREASE FHA MORTGAGE INSURANCE LIMIT IN COMMONWEALTH OF VIRGINIA
Charlottesville & Harrisonburg areas get higher increases due to market pressures

RICHMOND - U.S. Department of Housing and Urban Development Secretary Alphonso Jackson has announced that
the Federal Housing Administration, a part of HUD, has increased single-family mortgage insurance limit by 7.4
percent in most of the cities and counties of Virginia, effective New Year's Day, 2005.

In most of the cities and counties of Virginia in calendar 2005 FHA will insure mortgages on a one-family home of
up to $172,632, The FHA mortgage limit for two-family homes has been raised to $220,992; on three-family homes
to $267,120; and on four-family homes to $331,968. These increases apply to most of the State, including mid-
sized cities like Blacksburg, Bristol, Danville, Emporia, Lynchburg, Martinsville, Pulaski, Radford, Roanoke, South
Boston, Staunton and Waynesboro and most of the state's rural counties.

Secretary Jackson also announced an 8 percent increase in FHA mortgage limits in the Charlottesville area that includes Charlottesville and Albemarle, Fluvanna, Greene and Nelson counties. Effective January 1st, FHA will insure mortgages of up to $211,755; on two-family homes of up to $238,503; on three-family homes of up to $289,770;
and on four-family homes of up to $331,968.

He also said that there would be a 10 percent increase in Harrisonburg and Rockingham County where, effective January 1st, FHA will now insure a one-family mortgage of up to $176,700; a two-family mortgage of up to
$220,992; a three-family mortgage of up to $267,120; and a four-family mortgage of up to $331,968.

FHA mortgage insurance limits in the "high cost" markets of Richmond-Petersburg, Hampton Roads and Winchester were increased earlier in 2004 as a result of submissions of recent home sales data by local area associations of REALTORS.

The higher limits apply to FHA's acquisition, acquisition & rehabilitation, energy-efficient, condominium, disaster and home equity conversion mortgage insurance products.

Higher FHA loan limits do not cost the government any money, because the FHA Insurance Fund is fully supported
by premiums paid by borrowers who receive FHA insurance.

The new FHA limits apply to most urban and rural areas of Virginia except "high-cost" housing areas such as the Richmond/Petersburg, Charlottesville/Albemarle or Tidewater (i.e., Norfolk/Newport News/Virginia Beach metropolitan area) and northern Virginia.

FHA-insured loans are attractive to low-income and first time homebuyers because they require only a three
percent downpayment and permits family and friends to contribute to the initial home buying expenses. FHA also
has more relaxed credit standards and permits borrowers to carry more debt than private mortgage insurers
typically allow.

Higher limits 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.

The new loan limits are part of an annual adjustment HUD makes to account for rising home prices. Under federal
law, loan limits are tied to the conforming loan limits of Freddie Mac and Fannie Mae, federally chartered
corporations that buy and package mortgages.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly people and people with disabilities and people living with AIDS. The Department also promotes economic and community development as
well as enforces the nations fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov.

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