The Federal Housing Administration is set to increase their loan limits, which should give a large helping hand to U.S. home buyers.The loan limits now span up to $729,750 in a good portion of U.S. counties. This is great move forward from the FHA, especially considering their loan reduction back in 2011.
Here are some FHA tips, courtesy of Ron Euliano over at Bridgeview Bank Mortgage.
What can an FHA mortgage do for home buyers?
An FHA mortgage provides a few advantages that loans by Freddie Mac or Fannie Mae do not.
- Buyers can have as low as a 3.5% downpayment
- "Looser" mortgage underwriting standards, in comparison to other loan backers
- FHA loan can be acquired 12 months after a foreclosure, short sale, or bankruptcy
- You can borrow more money from your bank with an FHA loan than with a conventional one
What is an FHA loan limit?
The FHA is part of HUD - The U.S. Department of Housing and Urban Development - and has been around since 1934.
Firstly, it is NOT a mortgage lender, but an insurer. It provides lenders protection against loss and default, and will insure any mortgage that meets the eligibility standards.
The eligibility standards are typically known as the "FHA Mortgage Guidelines." While these do tend to differ between purchase and refinance loans, there are some shared guidelines:
- All FHA loans have a maximum loan size that it will insure, dependent upon the type and location of the home
- Loan limits range up to $1,403,400 nationally (This particular limit is for a 4-unit home in L.A. County, California) - Note that this is 17% higher than the maximum provided by Fannie Mae or Freddie Mac
Today, mortgage rates continue to remain low and the loan limits provided by the FHA remain high. The low downpayment requirement of 3.5% of purchase price help allow for many people to become homeowners.
Need help getting started? Send me an e-mail or give me a call, and I will be happy to help.
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