HECM 203b Single-Family Limits

A few weeks ago we reported that HUD/FHA had left the Section 203b loan limits pretty much the same for 2007. We also provided a link to the HUD website where you can lookup the 203b HECM loan limits for each jurisdiction. However, a couple people commented that the HUD site was confusing because it reported several different limits. We thought it would be helpful to provide a simple state-by-state lookup for the 203b single-family limit - the only limit most potential reverse mortgage borrowers need to be concerned with.

Click on a state to see the current Section 203b single-family HECM loan limit for each county within that state. If you want information on Section 203b limits for other dwelling types, visit HUD's Website.

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Section 203b HECM Loan Limits Described

Section 203b of the National Housing Act sets limits as to the size of mortgage the Federal Houising Administration (FHA) will insure. FHA insurance protects lenders against risk of default and, so, encourages loans to low and moderate income families. Although not the original intent, Section 203b limits are also used to determine the maximum loan size the HUD’s Home Equity Conversion Mortgage (HECM) program.

Section 203b limits vary by city or county or may be set for an entire “Metropolitan area.” Presently (01/2007) limits range from a low of $200,160 in areas with lower-valued homes to a high of $362,790 in areas with the highest-valued homes (HUD calls them “high cost areas”) in the continental U.S. Limits in Alaska, Hawaii and other US Territories may be higher. According to data on HUD’s website, about 81% (2,610) of the 3,226 county limits are at the lowest level of $200,160.

Section 203b Limits Impact on HECM Loans

It is important to realize that Section 203b limits do not restrict homes of greater value from getting HECM insurance. Instead, they limit the amount of home value that can be used to determine the loan amounts. For example, the creditlines for a $200,160 home and a $250,000 home would be the same if the 203(b) limit is $200,160. In other words, even though the higher valued home is based on more total equity, the loan payments are limited by the maximum mortgage insurance (203-b) limit, if it is less than the home’s value.

203b Loan Limits Remain Largely Unchanged

PLP - Principal Limit Factor

No Change in Maximum HECM Loan Limits (203b) for 2007

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