FHA Reform under Housing and Economic Recovery Act

With the recently-passed Housing and Economic Recovery Act of 2008, Congress permanently increased FHA loan limits to up to 115% of local area median home prices – capped at $625,000. According to NAR estimates, in Essex County this will increase FHA-insured loans to up to $481,500 (same as the Fannie Mae/Freddie Mac conforming loan limit).

Additional FHA reform included streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. Also, the downpayment requirement on FHA loans will go up to 3.5% (from 3%). Realtor® leadership strongly supports these reforms and feel that the new guidelines make FHA a stronger, more modern and flexible program.