December 17, 2019
What kind of loan do you need in the new year? Are you interested in an FHA One-Time Close construction loan to build on your own land? An FHA purchase loan for existing construction? You’ll need to know a bit about home loan limits and how they affect your transaction.
The FHA and HUD announced higher loan guaranty limits for another year–2020 rates will increase in many housing markets with a small number of areas receiving no increases.
Conforming Loan Limits In 2020
A conforming loan is a mortgage meeting guidelines established by Fannie Mae and Freddie Mac including a maximum dollar amount. Your FHA home loan can be at or below a certain amount established each year by county.
Conforming loan limits are basically the Fannie and Freddie limits discussed above. There are low-cost areas and high-cost areas that have their own limits established by Fannie and Freddie. Some areas are “typical” and have loan limits reflecting that.
Is There An Advantage To A Conforming Loan?
A conforming loan may be easier to qualify for thanks to lower FICO score requirements and other factors; non-conforming loans, also known as Jumbo Loans are harder. They require higher down payments and higher FICO scores. Non-conforming loans carry a higher risk for the bank.
Jumbo Loans Are Possible
It is not impossible to get a Jumbo Loan, even an FHA Jumbo. But there may be additional requirements for such loans.
You may find lenders aren’t willing to work with non-traditional credit for a loan of this size, and some may also not be willing to work with borrowers who seek down payment assistance for amounts over a certain threshold.
But for borrowers who can afford the down payment, have solid credit, and have found a lender willing to extend a Jumbo Loan, this option can help expand the horizon, so to speak, on the size and price range of homes open for consideration by the borrower.
FHA Home Loan Limits In 2020
In December 2019, the FHA and HUD issued statements announcing higher FHA loan limits in 2020. Those limits include the following:
2020 FHA Nationwide Loan Guaranty Limits
- FHA single unit mortgage floor= $331,760
- FHA single unit mortgage ceiling=$765,600
2020 FHA Loan Limits For Low-Cost Areas:
- 65 percent of the national conforming limit of $510,400
- One-unit: $331,760
- Two-unit: $424,800
- Three-unit: $513,450
- Four-unit: $638,100
2020 FHA Loan Limits For High-Cost Areas
- 150 percent of the national conforming limit of $510,400
- One-unit: $765,600
- Two-unit: $980,325
- Three-unit: $1,184,925
- Four-unit: $1,472,550
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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