Timely news, information and advice concentrating on FHA, VA and USDA residential mortgage lending.

Vimeo Channel YouTube Channel

Articles in Category: Loan Limits

FHA 2014 Loan Limits

Recently we covered the FHA and HUD’s press release announcing changes in FHA loan limit policies. FHA loan limits have been changed in accordance with laws passed in 2008, which did not become effective until this year with regard to FHA loan limits. At the same time the FHA issued the press release announcing the changes, it also published a mortgagee letter describing the 2014 “floor” and “ceiling” for low-cost areas and high-cost housing markets, respectively. According to FHA Mortgagee Letter 2013-43, “The minimum FHA national loan limit “floor” is at 65 percent of the national conforming loan limit (which is $417,000 for a one unit property for the period January 1, 2014 through December 31, 2014). The “floor” applies to those areas where 115 percent of the median home | more...

 
FHA Loan Credit Score

FHA Single-Family Loan Rules For More Than One Loan

  FHA loan rules for single-family homes are designed to prevent investors from using these loans to buy more investment properties. An FHA borrower applying for a single-family home loan under the FHA program is required to use that home as the principle residence, and cannot buy, then turn around and vacate the property in order to rent it out. According to FHA loan rules found in HUD 4155.1, “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will | more...

 

FHA Credit Score Rules

We’ve gotten a lot of reader questions lately about FHA loan standards for credit, FICO scores and more. Many readers want to know what the FHA FICO score requirements are and whether their credit reports are good enough to qualify for an FHA mortgage. There are two important things to understand about FHA loan credit requirements. The FHA loan rules spell out the minimum FICO scores required by the FHA; those minimums are found in HUD 4155.1 Chapter Four, Section A. According to the FHA, “The table below describes the relationship between the borrower’s minimum credit score and the maximum loan-to-value (LTV) ratio for which he/she is eligible.” The FHA minimum for maximum financing is listed in the table above at 580. But many borrowers don’t understand that the FHA | more...

 

FHA Loan Reader Questions: Down Payments

A reader asks, “I have applied for an FHA loan. However, the home price is over the FHA limit in our area. We have enough money to get to the maximum loan amount, but we are not clear if that will be sufficient or if we will still need an additional 3.5% on top of that?” “As an example only – Let’s say the house costs $365,000 but the maximum FHA loan amount is $330,000. If we put down 35,000 to bring the loan amount to $330,000 will we still be required to put down more money?” The answer to this question is a bit complex, but we’ll quote the FHA loan rules word-for-word for maximum clarity. According to the FHA loan rulebook, HUD 4155.1 Chapter Five Section B, “Under | more...

 

FHA Loan Answers: How Long Is An FHA Loan?

One common FHA loan question is fairly simple and straightforward; how long can an FHA loan be? In general, FHA loans are available for 15 or 30 year terms. FHA loan rules as spelled out in HUD 4155.1 state that there is a maximum loan term–one that depends on the type of transaction and other factors. “The maximum mortgage term may not exceed 30 years from the date that amortization begins. In the case of adjustable rate mortgages (ARMs), the term must be for 30 years. FHA does not require that loan terms be in five year multiples.” FHA loan rules add, “Some programs require a shorter term, including certain streamline refinances made without appraisals.” For FHA Streamline Refinances made without an appraisal, FHA loan rules state, “The streamline refinance | more...

 

FHA Loan Limits For High Cost Counties: FHA Loan Questions

Many borrowers want to know why FHA home loans are available for the same size and type of properties, but in larger or smaller amounts depending on the market. Why aren’t FHA loan amounts standardized? The basic answer to this is that all housing markets are different, and the costs in one market are not necessarily the same for another. A two-bedroom home with a garage in Bangor, Maine might not cost the same to build or finance as a similar home in Cleveland, Ohio. The same goes for properties located on either coast—how much would that two-bedroom home build and sell for in Los Angeles or New York? To address these issues, the FHA has created a table that lists the FHA loan limits for counties where the costs | more...

 

FHA Loan Amounts: A Reader Question

A reader asks, “My son and I have a combined income of $68,000 yearly.  His credit score is 643 and mine is 639.  I also have a IRA worth $190,000 what do we qualify for from a FHA Loan?” This is a type of question that comes in frequently and unfortunately the answer isn’t as simple as doing the math and returning a loan amount. There are many variables that go into calculating an FHA home loan amount including the borrower’s financial qualifications, the lender’s requirements, the cost of the home and other factors. A house for sale in one part of the country for $150,000 might be worth much or (or less) in another part of the country. Since FHA loans for new purchases are calculated on the fair | more...

 

Adding Repair Costs To An FHA Home Loan

When you want to purchase a home with an FHA guaranteed home loan, the property you want to buy must be appraised to determine its eligibility for the loan. A home that does not meet FHA minimum property requirements may not necessarily be ruled out for an FHA loan–an appraiser may note certain corrections that should be made to bring the home up to standard. In such cases, the loan may be approved contingent on those corrections being made. But can the expense of those corrections, when not paid by the seller, be included in the FHA loan amount? FHA loan rules provide for this, stating under what circumstances repair or improvement costs can indeed be added to the loan. According to HUD 4155.1 Chapter Two, “Repairs and improvements may | more...

 

How FHA Loan Limits Work

Recently the FHA announced the new maximum loan limits for 2013. These limits are normally revised annually, but sometimes changes in the law may cause the limits to be recalculated depending on the new regulations put into place. The FHA limits published for 2013 are in effect for the entire calendar year from 1 January 2013 to 31 December 2013 unless otherwise changed by law. According to the FHA official site, maximum loan limits are developed as follows: “The statutory provisions of the National Housing Act establish the maximum loan limits and mortgage amounts for all FHA mortgage insurance programs. Maximum loan limits vary depending upon the • specific program under which a loan is insured • number of dwelling units in the property (one to four units), and • | more...

 

FHA Announces FHA Loan Limits For 2013

The FHA has released maximum loan information for 2013. According to Mortgagee Letter 12-26, “These limits apply to forward mortgages insured under the following sections of the National Housing Act (NHA): 203(b) (FHA’s basic 1-4 family mortgage, including condominiums), 203(h) (mortgages for disaster victims), and 203(k) (rehabilitation mortgage insurance).” The FHA says the new limits are applicable for January 1, 2013 through December 31, 2013. The FHA Floor and Ceiling loan limits “will remain the same as those that were in effect as announced in ML 11-39” last year. The FHA also announced in this mortgagee letter that the “maximum claim amount and loan limits for Home Equity Conversion Mortgages” will remain at $625,500. There are two areas borrowers should know about when it comes to FHA loan limits–the “floor” | more...