FHA Loan Limits
FHA, VA and USDA Make Changes to Support Homeownership
October 1, 2011 by James K Barath, CMPS · 4 Comments
The winds of change in residential financing has taken full force effective today. Every year just like the change in weather, the new fiscal year begins on October 1st for the US Department of Housing and Urban Development (FHA), Department of Veterans Affairs (VA) and USDA Guaranteed Rural Housing Loan Program (USDA).
With a new year of funding, changes for FHA, VA and USDA are mandatory in order to sustain their individual and collective role in the US housing industry.
Let’s get started with the major changes for each organization. When we talk about the biggest advocate in the housing industry, FHA is always top of mind awareness. Although FHA implements guideline changes throughout the year October 1st rolls out changes to the FHA Mortgage Limits for both forward and reverse mortgages.
For the past several years, FHA Mortgage Limits had been raised to help the housing market. This year the maximum FHA Mortgage Limit for the greater Joliet-Naperville-Gary Metropolitan Statistical Area (aka Chicago land) is being reduced from $410,000 down to $365,700 for a single-family home on a forward mortgage. The maximum principal FHA Mortgage Limit for a Home Equity Conversion Mortgage (aka. reverse mortgage) is $625,500.
With the reduction in the FHA Mortgage Limit, this will be good news for the FHA Insurance fund as they will have less exposure to large losses from higher priced homes and strategic defaults.
The US Department of Veterans Affairs (VA) will also be making changes that benefit both 1st time home buyers and repeat users of VA Guaranteed home loans. Across the board, VA has reduced their upfront loan fee for VA Guaranteed Loans on a graduated scale from today until 2013. These reduced fees will benefit both veterans and reservists/national guardsman alike.
Similar to VA, the USDA Guaranteed Rural Housing Loan Program has also reduced their upfront Guarantee fee from 3.50% down to 2.00% for purchase transactions. Unlike VA though, USDA will now be requiring an annual fee (aka mortgage insurance) of 0.30% on the outstanding principal balance.
While some would applaud these changes, others will voice their opposition. Either way, if you would like to learn more about the changes that FHA, VA and USDA have made to support homeownership just speak to a qualified mortgage professional on the team at GVC Mortgage, Inc.
If you or someone you know is thinking about buying a home, the combination of low home loan rates and affordable home prices make this an ideal time to buy a home. Want to know if you can afford a new home? Call or text me at 512-522-7284 to discuss your personal situation and your home loan options!
FHA Loan Limits
2011 FHA Maximum Loan Limits – Why You Need to Know
December 7, 2010 by James K Barath, CMPS · 2 Comments
Every year around this time, lenders receive confirmation of the coming year’s Fannie Mae and FHA maximum loan limits. Prior to the real estate bubble it was always a forgone conclusion that the Fannie Mae and FHA maximum loan limits would increase as this was a natural function of increasing home prices.
In the past several years however there has been a fear that the Fannie Mae and FHA maximum loan limits would be decreased as home prices have plunged and stagnated throughout country and even right here in Northwest Indiana.
Surprisingly, both 2011 Fannie Mae and FHA maximum loan limits remained unchanged from 2010. More attention historically speaking would have been given to the Fannie Mae maximum loan limits.
In 2011 much of the talk will be about FHA insured home loans as the home loan pendulum has swung from conventional loans to FHA loans. To illustrate this fact here is a look at the latest trends.
“FHA loans were the most common type of loan, with 43 percent of buyers choosing this option… More than half of first-time buyers (56 percent) chose FHA loans…”
*Profile of Home Buyers and Sellers 2010 – National Association of Realtors
If FHA loans are becoming such a large piece of real estate finance options, you might want to know how it could affect you as a home buyer, a homeowner who wants to refinance or as a homeowner who desires to sell their home.
Understanding how much the FHA maximum loan limit is not as simple as you might think unfortunately. There is not just one FHA maximum loan limit. Besides the maximum loan limit variance between a single family home and a four-family home, property location is the most important criteria.
FHA maximum loan limits are geographically based and whether or not that region is declared as a standard FHA Forward area, a low cost area (floor), a high cost area (ceiling) or a special exception area (i.e. Alaska, Hawaii, Guam and Virgin Islands). Different FHA maximum loan limits also apply to Home Equity Conversion Mortgages (aka. reverse mortgage) and the HOPE for Homeowners program.
Not only do FHA maximum loan limits vary by region, but more importantly they will vary by county. For instance, the FHA maximum loan limit for a single family home in Porter County Indiana is $410,000. Meanwhile in the adjacent county of La Porte County Indiana the FHA maximum loan limit for the same home is only $271,050.
If you are in the process of buying a home, selling a home or refinancing your home in Northwest Indiana, please contact us to learn how the 2011 FHA maximum loan limits could impact your next real estate decision.
FHA Loan Limits
2010 FHA Loan Limit Restrictions As Outlined by HUD
January 8, 2010 by James K Barath, CMPS · Leave a Comment
FHA home loans are federal assistance mortgages made by lenders, and backed by the government. The FHA doesn’t make loans to homeowners — it insures loans made to homeowners by federally-qualified lenders.
By all accounts, FHA home loans are surging in popularity.
- 2006, FHA insured 3.3% of all mortgages made
- Q2 2009, FHA insured 19.2% of all mortgages made
A major reason for the increase can be tied to guidelines.
As compared to its conforming mortgage cousins Fannie Mae and Freddie Mac, FHA home loans have lower downpayment requirements and looser credit standards. The FHA allows downpayments of 3.5 percent and Fannie Mae and Freddie Mac do not, as an example.
Another reason is that FHA home loans aren’t subject to credit score fees the way that conforming mortgages are. Through Fannie or Freddie, a home buyer with a 650 FICO and 20% down is subject to 3% in risk fees. Via the FHA, the fee is zero, making FHA the better “deal”.
The FHA published its 2010 loan limits. There’s no change from 2009.
The base 2010 FHA loan limits are:
- 1-unit : $271,050
- 2-unit : $347,000
- 3-unit : $419,400
- 4-unit : $521,250
We say “base” because these loan limits don’t apply to all areas equally. Higher-cost regions get higher loan limits, based on typical home values.
Homes in Lake and Porter County Indiana, for example, can be FHA-insured up to $410,000 in 2010, as well as homes in Lake, Cook, Dupage and Will County in Illinois.
The official FHA announcement included a complete, county-by-county FHA loan limit list. The first spreadsheet shows each county at or above the $729,750 maximum; the second list is everyone else.
If your home’s county is on neither list, use the “base” numbers above.
Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.
