FHA modifying their strategy
The FHA made a recent announcement that it intends to modify their stance on lending in real estate market, likely due to improved market health.
The FHA is reassessing “upper limits” on mortgages for areas with high priced homes. Approximately 650 counties in the U.S. will see this this change. The previous maximum upper limit was set at $729,750, which will now see a reduction to $625,500. This change is being initiated to encourage new homebuyers that do not have high purchasing power.
Because of the 2008 financial crisis, the FHA felt that it had to intervene in the market with higher limits to aid homebuyers in their purchases. Carol Galante, the FHA Commissioner, remarked on the changes as “an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved.” The FHA only requires a minimum 3.5% down payment for customers looking to receive a mortgage. The FHA’s total portfolio of mortgages is estimated at 5 million.