FHA Reverse Mortgage Limit To Increase In 2020

Just like with forward mortgages, the Federal Housing Administration is set to increase the maximum claim amount for a reverse mortgage in the year, 2020. The FHA said that the HECM limit will be increased this new year from $726,525 in 2019 to $765,600 in 2020. This would mark the fourth consecutive year that the FHA has increased the limit of the HECM. In the past two years, the loan limit was at $675,650. Given that figure, the HECM limit as increased by nearly $100,000 since 2018.

The HECM limit is reliant on the 150% of the conforming limits of the Federal Housing Finance Agency for Fannie Mae and Freddie Mac, which were just recently increased to over $510,000. However, there’s no geographic variation for the loan limit of the HECM unlike the loan limits of Fannie and Freddie as well as the forward mortgage limit of FHA.

The limit of reverse mortgage loans is $765,600 for all the parts of the United States, including the areas that are high cost and the special places of Guam, Hawaii, Alaska, as well as the U.S. Virgin Islands, where forward mortgage limits go beyond the other parts of the country.

General Speaking, reverse mortgage loans is also called Home Equity Conversion Mortgages or HECM. It is a financial product geared towards homeowners who are at least 62 years old that lets borrowers convert a part of the equity of their house into cash without having to pay monthly payments.

Although the loans are created by private mortgage lenders, the federal government insures them, which means the borrowers would never owe more than the actual worth of the house.

And provided that the borrower still lives in the house, he or she could stay in the house provided that they continue to make insurance and property tax payments, make sure that the house is always in good repair, and use it as their main home.

The boost nearly $40,000 over the HECM limit last year means that the borrowers could be able to get more equity from their houses using a reverse mortgage loan in Columbia that is insured by the government.

This also means that more consumers would be able to qualify for the loan.

Since the HECM needs borrowers to pay off their current mortgage before taking out a new loan, some borrowers who have high mortgage balances might not have been able to get enough proceeds for them to qualify. Now, with this higher claim amount, borrowers may have sufficient cash in the HECM loan to finally make it work.

The FHA said that the new HECM limits will take effect for case number that have been assigned on or after Jan. 1 2020 through Dec. 31, 2020.

Call Reverse Mortgage Specialist if you wish to learn more about reverse mortgage loans.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/