Just before Thanksgiving the Federal Housing Finance Agency released the conforming loan limits change for 2017. This change resulted in higher loan limits beginning in January for many counties across the country. The FHA has now followed suit. Here is what to know about the FHA Loan Limits changes…
The Federal Housing Administration is the outlet insuring loans for people looking to purchase a home or refinance a home with little equity. The program insures loans up to the maximum loan limit in the county in which the property is located. Using Sonoma County, California as an example the maximum loan limit for 2016 was $554,600. This number is rising to $595,600 for 2017. This represents a significant change for people looking to purchase a home who have good income, sufficient credit, and a healthy debt to income ratio who are otherwise tight on cash to close. This applies to a home buyer by allowing them to purchase up to $615,000 in the county of Sonoma with just 3.5% down. This change represents bigger borrowing power in nearly every county across the United States.
The fact that both FHA and the Conforming loan balances are now higher in nearly every county nationwide represents a growing trend of a more exuberant economy. Higher loan balance limits can mean the difference between renting and owning for many. The reason this particularly beneficial is that the FHA while allowing a low down payment is also very flexible in unique or difficult circumstances consumers sometimes are faced with.
Some of the things include:
- Debt to income ratios as high as 55%
- Credit scores as low 580 to loans at $424,100 and 640 score for loans exceeding $424,100
- Waiting time on previous short sale 3 years
- Waiting time on previous foreclosure 3 years
- Waiting time on previous Chapter 7 Bankruptcy 2 years
- Will allow a borrower to refinance a second mortgage up to 96.5 loan to value
If you are looking to buy a home in 2017, an FHA loan could be a favorable vehicle to help get you there. An experienced mortgage lender who specializes in FHA loans may be the best place to begin looking.
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