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March 2, 2006
HUD OKAYS 8.2 PERCENT INCREASE IN FHA MORTGAGE LIMITS IN RICHMOND METROPOLITAN AREA
RICHMOND - The U.S. Department of Housing and Urban Development has approved an 8.2 percent increase in the maximum mortgage that can be insured by the Federal Housing Administration (FHA), a part of HUD in the Richmond-Petersburg metropolitan area. The increase is effective for mortgages endorsed on or after March 1, 2006.
There currently are nearly 29,000 active FHA-insured mortgages with at total value of $2.6 billion in the Richmond-Petersburg metropolitan area.
HUD's decision to increase FHA mortgage insurance limits in the Richmond metropolitan area was based on recent sales data submitted by the Richmond Association of REALTORS and the Virginia Mortgage Lenders Association and
is on top of the almost 11 percent increase HUD approved to take effect in the area on New Year's Day, 2006.
As a result of HUD's decision, effective immediately the FHA mortgage insurance limit on one-family homes will rise
8.2 percent to $256,500; the FHA limit on two-family homes will rise to $288,900; the FHA limit on three-family
houses will rise to $351,000; and the FHA limit on four-family houses will rise to $405,000.
"FHA mortgages have always been attractive and affordable, particularly to first-time buyers," said HUD Richmond Field Office Director Bill Miles. "We appreciate the efforts by the Richmond Association of Lenders and the Virginia Mortgage Lenders Association to make FHA even more attractive to buyers and even more competitive in the
greater Richmond market."
"We are proud to play a part in this endeavor. Expanding housing opportunities and ensuring housing affordability
are two of our most important priorities; and increasing the loan limits is a significant step towards achieving those goals." Wes Atiyeh, 2006 President, Richmond Association of REALTORS and Central Virginia Regional MLS (CVR MLS).
"Thousands of Richmond area families have used FHA mortgages to buy their homes because they offer such
favorable terms," said Linda Melton, President of the Virginia Mortgage Lenders Association. "Thanks to the data
VMLA and the Richmond REALTORS have submitted and HUD's decision, we've made FHA's terms even more
favorable in the Richmond metro area."
FHA insured mortgages are especially attractive to first-time homebuyers because of down payment requirements
that are lower and easier to assemble than most conventional mortgage products. FHA also has more relaxed credit standards and permits borrowers to carry more debt than private mortgage insurers typically allow and FHA lenders must provide loss mitigation assistance to borrowers who experience financial difficulties.
The higher FHA limits apply to FHA purchase mortgages, acquisition and rehabilitation mortgages, energy efficient mortgages, disaster recovery mortgages and home equity conversion or "reverse" mortgages.
The higher FHA loan limits will not cost the government any money, because the FHA Insurance Fund is fully supported by premiums paid by borrowers who receive FHA insurance.
For FHA purposes, the Richmond metropolitan area includes the cities of Richmond, Colonial Heights, Hopewell and Petersburg and Amelia, Caroline, Charles City, Chesterfield, Cumberland, Dinwiddie, Goochland, Hanover, Henrico,
King and Queen, King William, Louisa, New Kent, Prince George and Sussex counties and the higher limits are in
effect for all of these jurisdictions.
Like the Hampton Roads, Charlottesville, Winchester and northern Virginia metropolitan areas, FHA considers the Richmond area to be a "high cost" housing market with FHA loan limits considerably higher than in smaller
communities in the rest of the Commonwealth.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as
well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov.