FHA Loan Limits Exteneded for 2010
The existing mortgage loan limits for FHA loans have been extended through the end of 2010. This move is expected to help ailing US housing markets by extending the availability of FHA home loans to homebuyers and homeowners in higher priced markets. FHA home loan limits are based on 125% of local median home value, and vary by location. With the crash of subprime mortgage lending, FHA plays a significant role in providing home loans for borrowers who cannot meet conventional mortgage lending requirements. Challenges can include:
Bad credit: FHA guidelines allow borrowers to carry more debt than conventional lenders, and also qualify borrowers with bankruptcy filings a minimum of two years prior to applying for an FHA loan and foreclosure occurring a minimum of three years prior to applying. FHA does not require a minimum credit scores, but instead focuses on borrowers’ demonstrated ability to make mortgage payments.
Low down payment: FHA loans require as little as 3.5 percent down for home purchases, and down payment funds can be provided by family members, employers and housing assistance programs. The source of down payment funds is subject to verification, but FHA loan requirements are “friendly” toward first time buyers and others with low cash reserves. FHA guidelines allow for closing costs and the up-front mortgage insurance premium to be added to the home loan amount; borrowers may also elect to pay higher mortgage rates and have their lenders pay closing costs.
FHA 203k Loans – These Rehabilitation mortgages available to qualified borrowers: FHA can provide mortgage loans based on a home’s potential value after it has been refurbished; this provides up front funding for renovation expenses. Ask FHA lenders for details and review the updated FHA guidelines for this program.
When getting quotes for home loans, consider the APR and closing costs, in addition to FHA mortgage rates. This can help you find savings on closing costs. The APR includes the mortgage rate and closing costs, so if you have two quotes offering the same mortgage rate, the lower APR indicates lower closing costs.
