FHA is waiting to give you a loan

More in area taking advantage of higher limits as terms improve
By AUBREY COHEN

Approaching the end of a fellowship in sports medicine and the start of his career at the University of Washington, Dr. Ashwin Rao recently decided to buy his first home. But he didn't have much money saved up for a down payment.

"I wanted to start building some equity," the 31-year-old said last week. "This is my first permanent job where I'm not planning on moving in the next few years."

During the real-estate boom of recent years, there would have been many loan options. But most of these programs disappeared with the market slowdown last summer, so Rao turned to an old standby -- the Federal Housing Administration.

He could use the FHA for his $444,000 loan thanks to February's federal stimulus package, which temporarily raised the agency's cap from $362,790 to $567,500 in King County. The new limit also applied to conforming loans, which go to borrowers with better credit and bigger down payments, are backed by federally sponsored mortgage giants Fannie Mae and Freddie Mac, and had been capped at $417,000.

The new, bigger FHA loans have started catching on in recent months in the Seattle area and elsewhere, according to local lenders. But generally borrowers have avoided the larger conforming loans because, at first, they imposed much higher interest rates and extra restrictions.

Source: http://seattlepi.nwsource.com/local/367141_mortgage16.html