FHA Sets National Loan Limit for Reverse Mortgage Program at $417,000
October 6th, 2008
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If you are 62 or older and have been considering a reverse mortgage, the FHA and HUD just approved a new national limit of $417,000 for HECMs. The new limit is not set in stone yet as there are no set deadlines yet; but their target effective date is November 1st. There was some debate over this increase, and some interpretations of HR 3221 led some to argue that the limit could have been increased up to $625,000. However, after much debate, the final decision was a national limit set at $417,000.
Want to know more about Reverse Mortgages and the FHA HECM Program? Check out our Introduction to FHA Reverse Mortgages.
Previously, the HECM program limits ranged from $200,160 to $362,790 depending on your specific county. This increase has been a welcomed changed that many have been longing for, since FHA has been a bit slow in terms of keeping up with increasing home values. The higher lending limit for these reverse mortgages are especially helpful as seniors are assured they can rely on more of their homes value. Especially during this tough economic downturn, this increase will help to provide a stronger cushion as many seniors find less stability in their retirement portfolios.
A reverse mortgage is unique loan that gives seniors an ability to tap into their home equity without having to take on new mortgage payments or selling their home. Typically, borrowers can receive these funds in one lump sum payment or through graduated monthly payments. The key element of a reverse mortgage when compared to traditional mortgages is that no payments are made during the life of the loan. Many seniors will turn to reverse mortgages to help with day to day living expenses, medical and health costs, and general supplemental retirement income.
I’ve compiled some links to helpful resources offered by HUD and FHA:
HUD - Reverse Mortgage For Seniors
HUD - Reverse Mortgage and HECM Counseling
AARP - Reverse Mortgage Calculator
For more information, FHA Loan Pros offers an easy to understand basic background of FHA Reverse Mortgages and the HECM program. Click Here to jump to that page.
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This entry was posted on Monday, October 6th, 2008 at 11:37 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
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October 7th, 2008 at 4:05 am
Finally! Now we just need the lenders to step up to the plate and get this into there benefit calculators sooner then later so we can start offering the increased limits to the borrowers who need it the most. Most lenders have done away with there Jumbo programs, this gives some addtional hope to those customers.
October 7th, 2008 at 9:46 pm
Definitely. Once this increase is official, I’ll be sure to post a reminder and the updated online financial calculators. Thanks for your input Jeff
October 9th, 2008 at 6:06 am
This increase has been a welcomed changed that many have been longing for, since FHA has been a bit slow in terms of keeping up with increasing home values. The higher lending limit for these reverse mortgages are especially helpful as seniors are assured they can rely on more of their homes value.