FHA Raising limits: A Primer
FHA Raising Limits
FHA raising limits. Loan limits will now be raised up to $729, 750. With the FHA insuring more than 40% of home mortgages last year it is worth taking a moment to consider why:
With FHA Raising Limits, Remember
- The FHA loan usually features attractive interest rates.
- Down payments can be as low as 3.5% versus 20% for a conventional mortgage.
- Beware: Expensive and required private mortgage insurance may offset some of these advantages.
- FHA mortgages may still be the best deal in town; hence their popularity.
The FHA has made home ownership a realistic goal for those who simply can’t get the kind of traction they need for a conventional mortgage. By traction I mean cash for a down payment and a high credit score to go along with it. These are not the only considerations lenders take into consideration but they are prerequisites. When coupled with a steady good paying and secure job they will put you in the driver’s seat with the lender.
FHA raising limits Helps Lower Priced Buyers Too
These higher FHA limits will have a greater impact in the more expensive home markets. Critics say they exceed the needs of first time buyers. The fact that you are not near the ceiling of what the FHA raising limits offers is in your favor. If the home you are buying is near the ceiling of the FHA raising limits it may be prudent to go conventional route with a lower priced home.
The Fannie Mae and Freddie Mac limits remain at $625, 500.
FHA Trims Waiting Period for Borrowers in Foreclosure
Borrowers who have experience a Foreclosure must ordinarily wait 3 years before reapplying for an FHA loan. As of August 15, 2013 there will be an Economic Hardship Exception trimming the waiting period to 1 year. The FHA recognized that recession related hardship created conditions where ” their credit histories may not truly reflect their true ability or propensity to repay a mortgage.” To qualify a borrower must demonstrate that they had an income loss of at least 20 percent for at least 6 months due to loss of employment or loss of income beyond the borrower’s control. They must also demonstrate they have fully recovered from the event and completed housing counseling. Proof of “satisfactory credit” may be demonstrated by 12 months of good payment history on payments such as a mortgage, rent or credit account. This policy will be effective through September 30, 2016.
I find it odd that Fannie and freddie’s limits are below fha’s. we’ll discuss why in a future posting.