Mortgage Limits Are Raised in Area

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Copyright, Richmond Times-Dispatch, Used by Permission

by Carol Hazard, Times-Dispatch Staff Writer

First-time home buyers, and others, can pick from more homes - and pay more.

Mortgage limits were increased for government-backed loans in the Richmond-Petersburg area.

"It's been a long time coming," Margaret Sutherland, president of the Virginia Mortgage Bankers Association of Richmond, said yesterday.

"This is the first time we have gotten a significant increase."

Typically, the U.S. Department of Housing and Urban Development raises the limits on Federal Housing Authority loans by $1,000 or $2,000 every year or so.

This year, it approved a mortgage increase of more than $25,000 for a single-family home in this area, raising the loan limit to $183,317 from $158,175. The Virginia Mortgage Bankers Association petitioned HUD for the increase.

Other increases that took effect Aug. 9 were:

• Two units (a duplex) to $206,473 from $184,752.
• Three units to $250,855 from $223,296.
• Four units to $289,448 from $277,512.

The increases allow FHA mortgages to keep pace with market conditions, Sutherland said.

"This is the first time that we, as lenders, have gone out and shown HUD that our sales prices are higher than what they say," she said.

"We have seen homes appreciate and skyrocket; some homes are bought before they go on the market."

The median single-family house price in Richmond, with half selling for more and half less, was $129,000 in the second quarter, according to the Richmond Association of Realtors.

The median price was $142,000 in Chesterfield County, $156,900 in Henrico County and $190,000 in Hanover County.

The FHA insures about 5,000 mortgages a year in the Richmond-Petersburg area, Sutherland said.

FHA mortgages are geared toward first-time home buyers. However, some FHA loans are given to others who, for example, may not have much money to put down or whose credit may be questionable.

"The FHA opens the door for people who can't get conventional loans," Sutherland said. "The lending guidelines are less strict."

The loans require a minimum 3 percent down and mortgage insurance premiums to protect lenders.