HECM Loan Limit Effective Immediately

At the direction of Congress, the Federal Housing Administration has increased the loan limit for reverse mortgages to $417,000 in the lower 48 states. The new loan limits for FHA-insured Home Equity Conversion Mortgages in Alaska and Hawaii have not been published yet. The national mortgage limit of $417,000 is "effectively immediately," FHA says in a mortgagee letter. Congress increased the loan limit for HECMs and imposed new limits on origination fees as part of an FHA modernization bill that the President signed July 30. "The new loan limit and other provisions will allow seniors to receive more benefit at lower origination cost to meet their retirement needs," said Peter Bell, president of the National Reverse Mortgage Lenders Association. Previously, the HECM loan limits were determined by area median house prices and ranged from $200,160 in rural areas to $362,790 in high cost areas. The new loan limit is likely to encourage senior to refinance their reverse mortgage so they can tap more equity in their homes.