Whether it’s a sign of an improving economy, or less risk tolerance, FHA loan limits for duplexes will be reduced as of January 1, 2014.
For much of the housing market recovery, the government sponsored insurance program increased the size of duplex mortgages it insured.
FHA insured limits vary by area and county. Higher priced regions like southern California, for example, had and have higher loan limits than more rural regions in the midwest.
Through much of the housing crisis, duplex borrowers in the Twin Cities could obtain FHA mortgages up to $467,250. Triplex borrowers could obtain FHA backed financing up to $564,800, and four unit building buyers could owner occupy properties with loans up to $701,900.
After the first of the year, however, those amounts will be reduced. Duplex loans will be limited to $407,800, triplex loans to $492,950 and fourplex loans will drop to $612,600.
Of course, it’s important to note that for many borrowers, FHA’s recent increase in mortgage insurance rates make it a less attractive financing option for many borrowers anyway. And, as always, FHA loans are available only to owner occupants.
Conforming loan limits appear more favorable. For duplexes in the seven county metro area they stand at $533,850, triplexes are at $645,300 and fourplexes at $801,950.
These loans may have higher down payment requirements than their FHA counterparts, but come with less expensive monthly mortgage insurance fees.
If you’re thinking of buying a duplex in the near future, feel free to contact me for a referral to a loan officer who understands multifamily financing.