Beginning January of 2017 FHA increased the HECM loan limit (aka Maximum Claim Amount) to $636,150 (formerly $625,500).
The new maximum claim amount is 150 percent of the Freddie Mac’s national conforming loan limit of $424,100 and it officially became available for any case numbers issued on or after January
1, 2017. This applies to all areas within the United States, including Hawaii, Alaska, Guam, and the U.S. Virgin Islands.
But wait! Does that mean that you can actually get a loan amount of $636,150? This part is a little confusing for the average person or even for a loan officer who typically just does traditional forward loans. In the forward loan world, a loan limit actually refers to the amount of money a borrowing homeowner can borrow.
To shed some light on what it actually means, below is a definition of Max Claim Amount aka MCA.
Max Claim Amount – MCA = the amount of home value used in calculating the Principal Loan Limit on the FHA HECM. It is the lesser of the appraised value or the lending limit for HECM’s (limit is $632,150).
Perhaps an example will help further explain how the HECM loan limit works. A 70 year old man or woman would qualify to get 57.6% of their home’s appraisal value. For example, if this same 70 year old had a home that was worth exactly $100,000.00 then they would be able to get a Home Equity Conversion Mortgage for $57,600. If this same 70 year old had a home that was worth $200,000.00 then they’d be able to get a reverse loan for $115,200. This goes on and on until your home is worth $636,150.00. So, in the event a 70 year old’s home appraised for exactly $636,150.00 they’d get 57.6% of that or $366,422.40 in dollars and cents. This same 70 year old would not get any more than $366,422.40 if there home appraised above the HECM loan limit.
So you see, you don’t actually get a loan of $636,150.00. Below is a table that shows the maximum available loan amount for several different age groups. The figures are based on a home that appraises for $636,150 or higher.
|Borrower Age||2017 Loan Limits||2016 & Prior Loan Limits|
Shawn Lawrence Vaillancourt
NMLS License # 387151. Licensed in CO, CA, WA, OR, MD, VA
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