Changes to FHA Loan Limits – January 2017

Changes to FHA Loan Limits – January 2017

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Consider an FHA Mortgage

fha loan limitsYou have decided to buy a home and that’s great! While the decision itself may be exciting, doing all of that required administrative work – locating pay stubs, collecting bank account details, assembling debt details – is not.  Then comes the issue of decision making: What do you want in a home, which mortgage lender to use, what type of mortgage to get. These are a lot of decisions that you cannot afford to make lightly

If you are a first-time home buyer, consider an FHA mortgage. You don’t need to have a huge down payment to buy your home, and the financial requirements are easier to meet.

An FHA loan is backed by the Federal Housing Administration (FHA). This means that the FHA financially protects the mortgage lender if a borrower can’t afford to pay their mortgage. While this means you, as the borrower, has to pay mortgage insurance, you will have an easier time qualifying for an FHA loan. And that is a wonderful thing!

How Much Are You Allows to Borrow?

How much you are allowed to borrow for an FHA loan depends on a number of factors. What’s more, these factors can change. Why? The FHA regularly reviews their policies and guidelines to make sure that they stay relevant and within reach for many Americans. And guess what? The FHA is updating the thresholds for their loans for 2017. This is the first increase since the housing crisis in 2006.

First, the FHA is increasing its loan limit “floor”, or lowest amount, from $271,050 to $275,665 in 2017. This amount is set at 65% of the national conforming FHA loan limit.

Next, the FHA is also increasing its maximum amount, or “ceiling” in higher cost of living areas from $625,000 to $636,150. This amount is 150% of national conforming FHA loan limits.

The FHA loan limits did not decrease in any part of the country at this time.

The FHA bases its FHA loan limits on the median prices of homes in metropolitan statistical areas and counties. Note that the FHA recalculates its national FHA loan limits every year, and these limits are a percentage of the national conforming loan limit, as stated earlier.

About FHA Mortgages

There’s more to an FHA loan than simply its loan limits. Both you and the property need to meet certain requirements, such as:

  1. You must plan to live in the home as your main residence.
  2. Your credit only has to be reasonable. If you don’t have credit or had to declare bankruptcy in the past, you actually could still qualify for an FHA loan.
  3. Have a steady income. Obviously, to make your payments, you need to have a job in a documented position. The longer you have been at that job, the better.

Those Pesky Other Mortgage Details

Like with any loan, there are various documents that you need to provide for your FHA mortgage application. These include:

  • Household income
  • Proof of employment and income
  • Bank account statements
  • Other assets, including real estate, that you have
  • List of any debts you may have

Come in to Shamrock Financial to get a full list of the documents and other requirements you need to provide to qualify specifically for an FHA loan.

Moving Forward

When buying a home is on your radar, an FHA-backed loan might be for you. When you come into Shamrock Financial to discuss your home buying plans, rest assured you will get quality service and quality advice, all in a comfortable and relaxing atmosphere. See what we have to offer, and move forward with home buying today.

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