January 8, 2018
How much can I borrow with an FHA mortgage in 2018? There’s no single answer to this question for a variety of reasons, but in general there are things you should know about an FHA mortgage that can help you understand how much you are able to borrow to buy a home.
FHA Loan Limits Are Set By County
FHA loan limits are broken down by county in each state. You can see a good example of this and learn what the FHA limit for your area is for the current year, but it is important to note that the dollar amounts you see are calculated before add-ons to the loan such as mortgage insurance premius, FHA Energy Efficient Mortgages, etc.
In other words, your loan limit is calculated with the adjusted value of the home and having approved add-ons to the loan are added afterwards and your ability to borrow is not hurt by those add-ons.
FHA Loan Calculators Vs. FHA Lending Limits By County
The amount you may be qualified to borrow can be estimated using an online FHA loan calculator, but it’s important to know that such loan calculators (unless expressly designed to include FHA loan limits in your county as part of the calculation) likely will tell you how much you may be qualified (credit-wise) to borrow rather than the actual loan limit for your area.
FHA Loan Limits Do Not Guarantee The Loan Amount
Some borrowers look at the list of FHA home loan limits and know that the homes they want to buy do not cost as much as the amount of the FHA home loan limit. They ask if it’s possible to apply for a home loan up to the amount of the limit anyway, hoping to take the remainder of the loan in cash.
This is not possible with an FHA mortgage on forward mortgages; cash back to the borrower is not allowed on “forward” loans except for FHA cash-out refinance loans, and in cases where money is paid out of escrow for approved construction, remodeling, rehab, etc.
In general, for non-reverse mortgages and FHA cash out refinancing, FHA loan proceeds can only be used for approved purposes and refunds are limited to compensating the buyer for items paid for up front in cash, but later included into the loan amount.
In certain cases, a cash payment may be applicable for those who refinance an FHA mortgage (in the form of an Up Front Mortgage Insurance Premium refund), but these are subject to FHA regulations and only apply for a limited time.
FHA Maximum Loan Amounts For Refinance Loans
Maximum loan amounts for FHA refinance loans may depend on several factors including how long you have owned the home, the original FHA loan case number date where applicable, whether you purchased or inherited the property to be secured by the FHA loan, etc.
Those who are applying for FHA 203 (h) refinance loans for natural disaster victims are subject to more lenient maximum loan terms based on LTV considerations and other factors. These loans are only available to those with properties in federally declared natural disaster areas.
Speak with a loan officer to determine what the maximum loan amount for a refinance loan transaction might be based on your specific circumstances.
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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