Revised Mortgage Limits for the St. Louis Metro Area

Information by State  Print version

June 11, 2001

In an effort to keep pace with rising home prices, the U.S. Department of Housing and Urban Development (HUD) has approved higher loan limits for Federal Housing Administration (FHA) insured mortgages in the metropolitan St. Louis Area. FHA, a part of HUD, helped approximately 900,000 families around the country qualify for mortgages in 2000.

FHA-insured loans of up to $161,500 are now available for single-family mortgages in the St. Louis metropolitan area. The previous loan limit was $142,050. The new limit for a two unit property is $181,900; the limit for a three unit property is $221,000; and for a four unit property, it is $255,000. The metropolitan area includes the City of St. Louis, the Missouri counties of Franklin, Jefferson, Lincoln, St. Charles, St. Louis and Warren and the Illinois counties of Clinton, Jersey, Madison, Monroe and St. Clair.

Under HUD's Homeownership initiative, increasing loan limits has been a top priority because it enables more families to become homeowners. Many potential homebuyers have the income to afford monthly mortgage payments but do not meet down payment and creditworthiness qualifications under conventional or private mortgage insurance underwriting guidelines.

FHA does not make mortgage loans directly, but rather insures loans made by private lenders to homebuyers. FHA insurance guarantees the lender timely payment of principal and interest, in the event the homebuyer defaults on the loan.

Because FHA mortgage insurance protects lenders from losses, it has enabled millions of Americans who would otherwise be locked out of the mortgage market and homeownership to qualify for mortgages.

FHA-insured loans benefit homebuyers in these ways:

• FHA down payments of 3 percent are lower than the minimum that many lenders require for non-FHA mortgages. High down payments are a major roadblock to homeownership.
  
  
• FHA's requirements for homebuyer credit ratings are more flexible than those set by many lenders for non-FHA borrowers.
  
  
• FHA permits homebuyers to use gifts from family members and non-profit groups to make their entire down payment, while conventional loans generally require homebuyers to come up with a portion of the down payment from their own funds.
  
  
• FHA permits a borrower to carry more debt than a private mortgage insurer typically allows.