Friday, November 18, 2011

Manhattan Beach-Beach Cities: FHA Loan Limits increased to $729,750

In a move calculated to make many of us shake our heads with wonder,  Congress passed a bill today that will increase the loan limits for FHA loans to $729,750  while it left the conforming loan limit backed by Fannie and Freddie at $625,500. 

To add to the confusion they  decided that while they won't increase the conforming loan limits back to $729,750,  they will lower the required down payment from 10% to 5%.

FHA has a lot of interesting quirks that are not found with conforming loans... including MMI.  Conforming loans have tougher guidelines for the borrower  to qualify for a loan.  FHA only requires a 3% down payment.  I know there are issues with Fannie and Freddie but higher limits with tougher standards  make more sense to me than lowering standards on conforming loans  and increasing loan limits on FHA...

Somedays it seems not only does the right hand not know what the left is doing but that they may not even be part of the same body.  Is it any wonder  housing continues to be such a problem. 

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