The measure will boost limits for FHA-insured loans in high-cost areas to 140% above the program’s base limit. The current limit is 110%. For special projects in high-cost areas, the HUD secretary will have the discretion to raise the maximum loan limit to 170% above the base.
The bill also authorizes $200 million annually to assist low- and moderate-income home buyers with downpayment and closing costs, providing grants of roughly $5,000 to an estimated 40,000 home buyers annually.
The legislation also contains a provision designed to increase the use of the FHA’s hybrid adjustable rate mortgages. These loans have a fixed interest rate for an initial period that is typically three, five, seven or 10 years and then switch over to an adjustable rate; they enable more families to qualify for a home loan because the initial interest rate is lower than the rate on a conventional 30-year, fixed-rate mortgage.
“NAHB congratulates the Administration on passage of the 'American Dream Downpayment Act,' which is the centerpiece of its housing agenda this year aimed at helping to achieve the goal of 5.5 million additional minority home owners by the end of the decade,” said Howard.
To read the bill in its entirely, click here and enter S. 811 in the box at the upper left.
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