The Federal Housing Administration has raised its mortgage limit for high-cost housing areas to $101,250 from $90,000--with the limit even higher for Hawaii, at $151,850.
Southern California, the Bay Area, Sacramento and Fresno and all or parts of 17 other states and the District of Columbia are included in the high-cost mortgage limit category, which is the maximum amount FHA will insure on a home purchase.
The loan limit for all other areas remains at $67,500 ($75,000 in Mono, Riverside and San Bernardino counties).
The higher loan limit will allow thousands of families to buy houses with down payments of 4% to 5%, according to Warren Lasko, executive vice president of the Mortgage Bankers Assn., who lauded the move. He added that on a $90,000 house, an FHA home buyer needs less than $4,000 down.