Single-family home limits have increased 15 percent effective January 1, 2006. For most of Minnesota, FHA will issue single-family home mortgages up to $200,160 and up to $244,625 in high cost areas in and around the Twin Cities.

The changes reflect higher home prices as the Administration works to make housing more affordable and accessible so that more families can own a piece of the American Dream, said HUD Secretary Alphonso Jackson in a News Release issued on January 3, 2006.

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 calculates the FHA loan limit for 3,226 geographic areas within the United States. The limits vary from area to area, but all fall within the range of $200,160 to $362,790.

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. Many low-income and first-time homebuyers are attracted to FHA-insured loans because the agency only requires a three-percent down payment.

The increases 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 . The reverse is repaid, with interest, when a homeowner sells the home or dies.


-Christopher Galler

All informtion from www.mnrealtor.com