Fha Raises Loan Limit To $115,900 Increase Reflects Higher Prices Of Spokane Homes

Prospective home buyers in Spokane County who qualify for loans insured by the Federal Housing Administration can now consider upgrading to homes with six-figure price tags.

Based in part on the increasing median price of homes here, the FHA bumped up the mortgage limit on single-family home loans by more than 15 percent, from $97,850 to $115,900. The new limit took effect Thursday.

Local real estate officials predict a minor surge in the market of midrange homes.

“It’s going to make it a lot easier for a lot of people and therefore it’s bound to be a positive factor in the Spokane market. I don’t believe anyone was expecting that much of an increase,” said Don Walker, communications director of the Spokane Association of Realtors.

Before the increase, the only option for most consumers looking for homes priced above $97,850 was a conventional loan, which typically requires a higher down payment and interest rate than FHA loans. In addition, FHA has more liberal income and credit guidelines.

“(The increase) means that people in a higher price range home can now get more affordable financing in the form of FHA financing, so it opens up the market to people who couldn’t afford the closing price of a home price range in excess of $100,000,” said Marcy Bennett, a loan officer with Farmers & Merchants Bank.

FHA loans, which account for about 23 percent of all home loans taken out in Spokane County, require less than 3 percent for a down payment. Conventional down payments may be 5 percent or more, Bennett said.

After the Washington, D.C., bureau of the FHA began to investigate home prices here, it announced Wednesday that it would increase the mortgage limit. The average home price here hovers around $100,000, according to statistics from the Realtors association.

The increase came as a surprise to the FHA’s Spokane branch. “I was caught totally off guard when I heard about this newest increase,” said Bob Seamons, senior underwriter at the Spokane FHA office.

The new limit is for all homes in Spokane County and those Stevens County homes in the Suncrest and Lakeridge subdivisions, Seamons said.

Although the increase may make real estate officials smile, Seamons warned that the effect may not be significant.

“The FHA tends to serve the lower end of the real estate market, so the fact that we can now make loans to $115,900 means that we’ll pick up a few homes, but not too many. People in that range tend to buy on conventional loans rather than FHA,” he said.