With all the media attention on the so-called credit crunch, it sounds like there are no mortgages available unless you have perfect credit, a 20% down-payment, and helped a little old lady across the street this morning. Not so – FHA to the rescue!

The Federal Housing Administration is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.  FHA loans had fallen out of favor over the past few years as people chose sub-prime mortgages with low teaser rates and little documentation, but currently one out of every five mortgages is FHA insured.

Do you need 20% down?  The great news is that FHA only requires 3 percent down. 3 percent!  And that 3 percent can come in the form of a gift or grant.  FHA borrowers only need to have $500 in a transaction.  All the while, FHA mortgage rates are as good or better than their conventional counterparts.

Low or no down payment, extremely competitive rates and easier qualifying, no wonder FHA is moving up the charts!

Finally – something with teeth!

As part of the economic stimulus package passed into law this past month, Fannie Mae, Freddie Mac, and the FHA have increased their conforming loan limited to $729,750 in the DC Metro area starting April 1!

Though pricing has yet to come out, this change should make buying in the DC Metro area much more affordable. Talk to your individual lender about how this impacts your qualification. FHA loans have not been viable for years because the caps were too low and the loan to cumbersome. The FHA limit is permanent, but the Fannie Mae and Freddie mac limit expires at the end of 2008.

Do you think a change like this will make you more or less likely to buy this spring and summer? Feel free to post a comment on our blog.

The sales statistics clearly show a buyers market with transactional volume down. Do you wonder where these stats come from? Check out the sales figures from the Greater Capital Area Association of Realtors.