FHA Loan Limit to Drop Over $37,000 January 1st, 2014
Planning on buying a home? Find out if the change in FHA loan limits will effect you.
What is an FHA loan?
- An FHA loan is a loan is that is INSURED (not directly funded) by the Federal Housing Agency & issued to a borrower through federally qualified lenders.
- Historically this type of loan has less stringent requirements on the borrower including lower acceptable credit scores.
- Minimum down payment is 3.5%.
- Seller assist up to 6% of the purchase price.
- Down payment can be 100% gift money from a relative.
- Borrower will pay Up Front Mortgage Insurance Premium (UFMIP) which can be rolled into closing costs (currently 1.75% for a 30 year term).
- Borrower will also pay the annual Mortgage Insurance Premium (MIP) in 12 installments rolled into the monthly payment (currently 1.35% for a 30 year term).
Who Will Be Looking at Less Expensive Housing Options Under the New FHA Loan Limits?
- Those with lower credit scores that can’t qualify for conventional financing
- Those who plan on using gift money for the full down payment
- Those who need a 6% seller assist to cover closing costs
If you have any questions please don’t hesitate to contact us. We can put you in touch with a lender who can help you find a loan that will work for you.