The higher FHA loan limits will not cost the government any money, because the FHA Insurance Fund is supported by premiums paid by borrowers who receive FHA insurance, and not taxpayers. Cuomo said the higher loan limits will particularly benefit first-time homebuyers and minority homebuyers. FHA insures 42 percent of all home mortgages to African American and Hispanic homebuyers. The increases will also benefit senior citizens who qualify for FHA-insured reverse mortgages. Reverse mortgages allow homeowners age 62 and older to borrow against the value of their homes without selling them.
Homeowners can select a lump-sum payment, monthly payments, or tap into a line of credit.
No repayment is required as long as a homeowner lives in a home with a reverse mortgage. The reverse mortgage is repaid, with interest, when a homeowner sells the home or dies. The FHA single family mortgage limits are increased effective January 1, 2001.