Articles Tagged With: FHA Loan Limits

August 20, 2015

FHA Loan FICO Score Requirements: Your Mileage May Vary

One of the most common questions about FHA home loans centers around FICO scores. Many borrowers wonder why their FICO scores may or may not be good enough to get FHA loan approval. FHA loan rules have minimum FICO scores defined in HUD 4155.1, but the confusion comes when a borrower who knows these minimums gets told their scores aren’t high enough for maximum financing or loan approval, depending on circumstances. The reason for this is simple: FHA loan minimums aren’t necessarily the lender’s minimum standards for FICO scores. The lender is free to require higher FICO minimums as long as that requirement is enforced in compliance with federal law. The minimum FHA FICO score requirement of 580 or better for maximum financing isn’t always what the lender will require–your | more...

August 12, 2015

FHA Refinance Loan Maximum Mortgage Calculation

By Joe Wallace

In recent posts we have discussed the maximum mortgage amount for FHA home loans. The borrower is required to make a minimum down payment on all new purchase FHA mortgage loans (3.5%) so that the maximum financing allowed would be 96.5%. Some borrowers may have to make larger down payments depending on credit scores and credit history. The FHA’s loan-to-value maximums can also be different depending on the type of transaction. With those ideas in mind, what are the FHA loan rules for refinance loans? For non-streamline, appraisal-required FHA refinance loans that feature no cash back to the borrower, FHA loan rules say the following: The maximum mortgage for a no cash out refinance with an appraisal (credit qualifying) is the lesser of the –97.75% Loan-To-Value (LTV) factor applied to | more...

June 9, 2015

FHA Loan Rules For Down Payments

By Joe Wallace

FHA home loans come with a maximum financing limit–a borrower is required to pay a certain percentage up front as a down payment. There is no such thing as a zero-downpayment FHA home loan, but the amount of the minimum is much lower than conventional loans in typical cases. FHA loan rules specify a minimum 3.5% down payment, but in some cases that down payment may be higher depending on circumstances. What kind of circumstances? One is a situation where the borrower’s FICO scores or other financial qualifications are borderline. FHA minimum FICO standards for maximum financing and to be eligible for the 3.5% down payment start at 580 and above. Your lender may actually have higher FICO requirements than 580 and that is permitted under FHA loan rules. Borrowers | more...

May 14, 2015

FHA Loans: Is There A Minimum Loan Amount?

By Joe Wallace

A reader asks, “Is there a minimum amount that you can get a loan for meaning (how cheap of a house will they loan on?) under 40K?” FHA loan rules in HUD 4155.1 do spell out an FHA loan limit, which is known as the “floor” on the bottom end, and the “ceiling” at the top end of the range. The FHA recently issued a mortgagee letter (HUDNo.2015-25) which updates the information for FHA loan limits in general and announces a new FHA loan rulebook to be issued soon, titled FHA Single Family Housing Policy Handbook 4000.1. The mortgagee letter states: “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 | more...

May 12, 2015

FHA Loan Amounts: A Reader Question

By Joe Wallace

A reader asks, “I have a few General but direct questions about FHA loans or ability to borrow & income status . In my case I have about an income range of 88k- 100k…My Fico Score is presently from 586-597; due to go up to 620 very shortly. My debt to income ratio is in the 25% range or so…Based on that information alone, how much max Loan I could get from FHA loan putting at least 3.5% down 0r 10% down on a house worth 395k or/and 270k.” FHA loan rules do permit lenders to approve a home loan for borrowers with FICO scores in the range mentioned in the reader question, but lender standards also apply. A potential FHA loan applicant should know many lenders are looking for | more...

December 22, 2014

FHA Announces 2015 FHA Home Loan Guaranty Limits

By Joe Wallace

The FHA and HUD have announced the loan guaranty limits for 2015. FHA Mortgagee Letter 2014-25, which announces 2015 limits and policy for single-family “forward loans” for new purchases, FHA Streamline loans, and Home Equity Conversion Mortgages (HECMs). According to the mortgagee letter, “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, 2015 through December 31, 2015). The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.” The FHA defines a high-cost area where the typical FHA loan guaranty rate may be different as follows: “Any area where the loan limit exceeds the floor is a high cost | more...

October 31, 2014

FHA Loans: What Can Affect Your Loan Amount?

By Joe Wallace

One of the first questions on the minds of many borrowers is a logical one: “How much can I borrow?” There’s no single answer for this as county loan guaranty limits apply, and in general the amount of the FHA home loan is based on the sale price of the home or the appraised value, whichever is lower. When it comes to home loan refinancing, the appraised value of the property is very important. There are factors that can affect the amount of the FHA home loan for new purchases or refinance loans beyond those factors. For example, if you choose to finance allowable fees and expenses (including some discount points depending on the transaction and lender policies) your loan amount will increase. If you make a larger down payment, | more...

August 29, 2014

FHA Maximum Loan Amounts: Some Basics

By Joe Wallace

FHA loan applicants often want to know how much they can borrow with an FHA mortgage. There’s no set answer to that question since the FHA loan amount depends on the appraised value of the home and other factors. Borrowers will need the amount of the sale price of a home before a loan amount can be properly calculated. Some borrowers want to know if they can apply for more than the sale price of the home with the intent of taking the excess funds for other purposes. This is not permitted for FHA home loans, so borrower who ask “how much can I borrow?” with that idea in mind should know it’s not a possibility. But the FHA loan basics for maximum loan amounts are spelled out for the | more...

February 10, 2014

Maximum FHA Loan Amounts For New Purchase Home Loans: What The Rules Say

By Joe Wallace

One of the most common questions about new purchase FHA loans–where the borrower wants to buy a home (as opposed to refinancing one) involves the maximum loan amount. What do FHA loan rules say about how much you can borrow? Is there a maximum dollar amount for the FHA loan? The answer isn’t as simple as quoting a dollar figure. The FHA loan rulebook doesn’t contain a single number that effectively limits the dollar amount. Instead, there are a variety of factors that may vary depending on where the home is located and other variables. The rules for FHA loan maximums are found in HUD 4155.1, Chapter Two Section A. Under the heading titled, “Maximum Mortgage Amounts For A Purchase” we find the following: “The maximum mortgage amount that FHA | more...

January 31, 2014

FHA Loan Occupancy Rules: A Reader Question

By Joe Wallace

A reader asks, “With a FHA Arm 5/1 or Section 251 loan, how long do I have to live in the house before I can sell it?” This may seem like a tricky question. FHA loan rules for single family home loans found in HUD 4155.1 do list occupancy requirements. According to Chapter Four: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower’s principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.” But that rule says nothing about the borrower’s ability to sell the property. Borrowers are | more...