The Department of Housing and Urban Development has officially increased the limits on single-family mortgages insured by the Federal Housing Administration.

As of Jan. 1, the new "floor,"or basic mortgage limit, is $154,896, while the maximum, or "ceiling," in high-cost areas is $280,749.

Last year's limits were $144,336 and $261,609, respectively.

The higher maximums should help thousands more families who need a little help from Uncle Sam become home owners.

Without the FHA standing behind them, people who don't have the income or credit standing to qualify for conventional financing would be relegated to the so-called subprime sector, where interest rates are significantly higher, or forced out of the housing market altogether.

Another attraction of FHA financing is that only a 3 percent downpayment is required.

"These new loan limits will further...expand home ownership opportunities for many more families while helping the FHA mortgage insurance program keep pace with the robust housing market," said HUD Secretary Mel Martinez.

To find the loan limits for your area, go to https://entp.hud.gov/idapp/html/hicostlook.cfm.

The higher limits have been expected since late November, when Fannie Mae and Freddie Mac, the two secondary mortgage market giants who supply most of the money for home loans, announced their new ceilings for 2003.

But because the government must calculate a limit for each of the nation's 3,000-plus counties, lenders weren't notified of the exact increases until the last Friday in December. And the press wasn't advised on the changes until a week later.

FHA loan limits are based on the increase in the ceiling on conventional home loans that can be purchased or securitized by Freddie Mac, which rose 7.3 percent as of Jan. 1, from $300,700 to $322,700.

The floor, which covers most of the nation's counties, is set at 48 percent of the Freddie Mac limit. The ceiling, which applies to about three dozen high-cost markets, is 87 percent of the conforming loan limit or 95 percent of the median house price for the area, whichever is less.

The higher limits also apply to reverse mortgages which allow senior owners age 62 and above to borrow against the value of their properties and renovation loans which enable owners to make necessary improvements to their houses.

In addition, loan limits have been increased for two to four-unit properties and for houses outside the continental United States.

The new nationwide basic limits are: $198,288 for two-unit structures, $239,664 for three-unit structures and $297,840 for four-unit buildings. For high-cost areas, the new ceilings are: $359.397 for two-unit homes, $434,391 for three-unit properties and $539,835 for four-unit structures.

In Alaska, Guam, Hawaii and the Virgin Islands, the limits are 150 percent of the new maximums.

The higher limits will not cost the government any money because the FHA insurance fund is fully supported by the premiums paid by borrowers.

Published: January 8, 2003

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.