This ARTICLE On 2020 FHA Loan Limits Increases To $331,760 On FHA Loans Was PUBLISHED On December 6th, 2019
BREAKING NEWS: 2020 FHA Loan Limits Increases To $331,760 On FHA Loans due to rising home prices:
- If you are looking to purchase a home in 2020 with an FHA mortgage, you may be able to buy a more expensive house
- The Federal Housing Finance Agency (FHFA) has released increase limits for conforming mortgages
- The Federal Housing Administration, overseen by the U.S. Department of Housing and Urban Development (HUD), has also increased loan limits for the calendar year 2020
- On December 3, 2019, FHA issued mortgage letter 19-19 and mortgage letter 19–20 regarding loan limits for all case numbers at sign-on or after January 1, 2020
- In this blog, we will detail the increased loan limits, why the change occurred, and how to apply for a mortgage with the increase in amounts.
In this article, we will cover and discuss the 2020 FHA Loan Limits Increases To $331,760 On FHA Loans.
Mortgage Process On FHA Loans
Applying for an FHA mortgage with Gustan Cho Associates is simple.
- All you need to do is call Mike Gracz on 630-659-7644 or send an email to firstname.lastname@example.org
- Mike Gracz will have a one on one mortgage consultation with you and determine the best loan product for your situation
- Depending on the state you are located in, either Mike or one of the highly skilled officers from Gustan Cho Associates will assist you with your mortgage pre-approval
- After your one on one consultation, you will be emailed an application link and a list of documents you need to send in
Depending on your sources of income, other documentation may be needed.
Taking Advantage Of The 2020 FHA Loan Limits Increases To $331,760
Here’s an example of the documents required:
Last 60 Days Bank Statements – to source down payment (minimum 3.5% of purchase price)
- Last 30 Days Pay Stubs
- Driver’s License
- Last Two Years W2’S
- Last Two Years Tax Returns (may not be needed)
Once we have all your income and asset documentation, your loan officer will run the automated underwriting system. For more on how the Automated Underwriting System works, please read our AUS BLOG.
2020 FHA Loan Limits Increases To $331,760 On Manual And Automated Underwriting System Approvals
Depending on the results of the automated underwriting system you may need a manual underwrite.
- Please view our blog on FHA MANUAL UNDERWRITING
- Assuming you fit the qualifications, your loan officer will then issue you a pre-approval letter so you can go house shopping
This is the most exciting time of the process.
Benefits Of FHA Versus Other Mortgage Programs
Advantages of FHA loans:
Lower credit score and down payment requirements:
- 580 or higher for 3.5% down payment
- 500 – 579 with a 10% down payment
Higher seller paid closing costs:
- Up to 6% of the purchase price compared to 3% for conventional loans
- Low-cost mortgage insurance options
FHA loans are assumable (family can take your loan over down the road).
Reason For 2020 FHA Loan Limits Increases To $331,760 On FHA Loans
What caused the FHA loan limit to increase?
- Each and every year, the Federal Housing Finance Administration analyzes housing data across the nation
- FHFA has determined there was an overall nationwide increase in the home price index (HPI) of approximately 5.38%
- The FHA loan limit in 2019 for single-family homes was $314,827 (which was up from $294,515 in 2018)
- The new loan limit for 2020 is $331,760, which is almost exactly 5.38% above the 2019 loan limit
- It is the responsibility of this department to keep home buyers eligible to purchase properties with affordable home loan products
- FHA mortgages are an amazing tool for achieving the American Dream in buying a home
FHA is a great low down payment option!
Floor And Ceiling Loan Limits On FHA Home Loans
HUD sets a nationwide standard for mortgage loan limits, and they have implemented a “floor” and “ceiling” loan limit.
- The floor loan limit for 2020 is $331,760 and the ceiling loan limit is $765,600 (for one-unit properties)
- The ceiling limit is 150% of the conforming loan limit for 2020 which is $510,400
- The areas in which the loan limit is higher than $331,760 are called “high-cost areas”
- Homes are well above the median home price index in these areas
- Without the increased loan limits, many potential buyers would not be able to qualify for a home
- Many parts of California, such as San Francisco and Los Angeles fit into the high-cost area
Most of the Denver metropolitan area, New York City area, New Jersey area, Washington DC areas have the ceiling FHA loan limit.
Nationwide FHA Loan Limit Caps
Just like in the home you may be purchasing, there are areas between the floor and the ceiling, where the loan limits vary.
- For a list of counties between the floor and the ceiling limits, please see HUD’S WEBSITE
- There are many areas of the country that fit into this bucket
- To search your county, please see the FHA LOAN LIMIT LOOK UP TOOL
Please note this lookup tool will NOT reflect the updated loan limits until January 1, 2020.
Taking Advantage Of 2020 FHA Loan Limits Increases With A Lender With No Overlays
Now that you are up to date on why the FHA loan limits increase occurred and how to apply for an FHA mortgage with Gustan Cho Associates at Loan Cabin, we encourage you to reach out today. About 75% of our clients were either turned down by their current lender or are not getting the customer service they need to get your mortgage closed. We strive on being up to date on all mortgage guidelines and guideline updates. Please subscribe to our ever-growing YouTube channel where you can find updated mortgage information.