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January 8, 2007
HUD OKAYS INCREASE IN FHA MORTGAGE LIMITS IN RICHMOND METRO AREA
RICHMOND - The U.S. Department of Housing and Urban Development has approved a 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.
As a result of HUD's decision, during calendar year 2007 the FHA mortgage insurance limit on one-family houses will rise 2 percent from $256,500 to $261,725; on two-family houses from $288,900 to $294,785; on three-family
houses from $351,000 to $358,150; and on four-family houses from $405,000 to $413,250.
The increase is effective for mortgages endorsed on or after New Year's Day 2007. 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.
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. FHA limits were last raised in the area in
March 2006 at the request of and based on data submitted by the Richmond Association of REALTORS.
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.
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.
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, 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 programs is available at www.hud.gov