If you’re looking to start the new year off with a fresh start by upgrading to a new home, there’s great news for potential buyers. Starting this year, the Federal Housing Agency (FHA) announced that they are increasing the limits on FHA loans. So what does this mean for qualified potential home buyers? Whether you’re a first-time buyer or looking for an upgrade, your dream home might be closer than you think.
What Is An FHA Loan?
In short, an FHA loan is a mortgage insured through the Federal Housing Administration and available to qualified buyers through approved mortgage lenders. Since they’re backed by the government, FHAs offer more flexible terms than conventional loans and are perfect for those looking to build their credit or for a low down payment. Offered in fixed-rate terms of 15 and 30 years, FHA loans are popular with first-time homebuyers, however, borrowers must pay FHA mortgage insurance.
After 10 years of unchanged loan limits, the FHA has been increasing loan limits since 2016 in order to account for increasing home values. Currently, the FHA sets the loan limit for most counties at 115 percent of the county’s median home price with a minimum for low-cost areas and a maximum for high-cost areas. The minimum or “floor” loan limit is for low-cost areas where the cost of the median home is 65 percent less than the Federal Housing Finance Agency’s conforming loan limit. In contrast, the maximum or “ceiling” limit is for high-cost areas where the price of a home reaches or exceeds 150 percent of the conforming loan limit.
What Does This Mean For Potential Buyers?
With home values up 5.1 percent from last year, the FHA announced in its December 2019 Mortgagee Letter that the conforming loan limit will be increased to $510,400, raising the floor on FHA loans to $331,760 and the ceiling to $765,600. For potential homeowners, this means more options and choices available for homes and the chance to live in their ideal neighborhood. Finding the mortgage limit of prospective neighborhoods is simple, so if you’re a qualified buyer it’s never been easier to get an FHA loan to finance your dream home.
Expertise You Can Count On
Getting the mortgage that’s right for you is easier than you think. If you’re thinking about purchasing a new home, now is the perfect time of year to do it. For more than 25 years, Ed Currie and his team have used their knowledge and expertise to help more than 5,000 clients get the mortgage financing they need. If you’re ready to secure financing for a new home, schedule an appointment or contact Ed today with your questions at 847-214-2404. Check us out on Facebook, Twitter, LinkedIn, Pinterest or Instagram for our latest tips and updates!