NAHB backs bill to raise FHA loan limitations

Citing the importance of Federal Housing Administration insurance to the production of affordable rental housing, the National Association of Home Builders April 30 applauded legislation introduced in the U.S. House of Representatives that would increase FHA multifamily mortgage loan limits by 25 percent.

NAHB called on Congress to support the "FHA Multifamily Housing Mortgage Loan Limit Adjustment Act" (HR 1629), introduced April 27 by Reps. Marge Roukema (R-N.J.) and Barney Frank (D-Mass.). The proposed legislation, which is supported by a broad coalition of national housing organizations, would raise the cap on FHA-insured multifamily mortgage loans for the first time since 1992.

"FHA insurance programs play a critical role in facilitating the construction and rehabilitation of affordable rental housing. Increasing the cap on loan limits would spur production of thousands of apartments that would be affordable to low- and moderate-income working families," said Bruce Smith, NAHB president, in a press release.

"There is tremendous demand for affordable apartments, especially in major metropolitan areas, but it has been virtually impossible to use FHA insurance in these areas because the costs of land and construction have risen significantly over the past nine years, but the amount of financing FHA can insure hasn't increased at all," Smith said.

More than 5 million renter households nationwide have critical housing needs, spending more than half of their income on housing or living in severely inadequate units.

Although HR 1629 increases the FHA loan limits, it does not include a provision to index loan limits to inflation a provision NAHB believes is essential to ensuring its long-term effectiveness.