FHA High-Balance Jumbo Loans Mortgage Guidelines

This Article Is About FHA High-Balance Jumbo Loans Mortgage Guidelines

As Americans, we understand that property values range dramatically across our nation.

  • Areas such as San Francisco, California compared to Chicago, Illinois compared to Mobile, Alabama will show a wide range of property values
  • A home worth $100,000 in middle America may very well be worth close to $1 million in places such as Fairfax, Virginia
  • The cost of living is different throughout our nation as well
  • The Federal Housing Authority or FHA realizes these differences as well
  • There have been Conforming and FHA loan limits for a long time, even before the real estate crash of 2008
  • In this blog, we will detail what a high balance FHA area means and how to apply for a high balance FHA mortgage with Gustan Cho Associates

In this article, we will discuss and cover FHA High-Balance Jumbo Loans Mortgage Guidelines.

What Are FHA High-Balance Jumbo Loans

A high balance area is exactly what it sounds like. It is an area of the country where the property values are higher compared to the national average.

  • In areas where the median home value exceeds the national average by 115%, are considered high balance areas
  • In these high balance areas, the FHA loan limit is considerably higher compared to the 2021 FHA baseline loan limit of $356,362
  • Some of the areas include Los Angeles, San Diego, San Francisco, Denver, Miami, Naples, Atlanta, Hawaii, Chicago, Indianapolis, Kansas City, Minneapolis, Dallas, San Antonio, Richmond
  • Please see the FHA LOAN LIMIT SEARCH TOOL to see if your area is included in the high balance realm

These high balance areas were created to help more Americans achieve homeownership nationwide.

How FHA High-Balance Jumbo Loans Mortgage Guidelines Determined

How FHA High-Balance Jumbo Loans Mortgage Guidelines Determined

The data to determine what areas are considered high balance is taken directly from the Federal Housing Finance Agency or FHFA.

  • They will compose an annual report that shows the House Price Index throughout the nation
  • Each year the loan limit will adjust depending on the state of the real estate economy
  • The conforming loan limit and FHA loan limit move up and down as home price indexes move up and down
  • Some areas of the nation have seen a slight dip and property values by others are still on the rise
  • The FHFA has a tough job creating the loan limits each year
  • Many Americans are forced into using JUMBO MORTGAGE LOANS to buy homes

A quick side note, there is currently not a loan limit for VA mortgages. most of our investors A VA home loan at $3 million. The Conventional loan limit set by FHFA is currently $548,250

FHA High-Balance Jumbo Loans Mortgage Guidelines And Mortgage Process

What are the steps for obtaining a high balance FHA mortgage?

  • The steps are the same as any FHA mortgage
  • Just because you are in a high balance area, does not change the application process
  • The FHA requirements are the same for high balance areas
  • Meaning you still only need a 3.5% down payment with a credit score is 580 or above
  • If your scores are below 580, then you need a 10% down payment
  • Payment history and manual underwriting requirements are also the same
  • Please see our FHA MANUAL UNDERWRITING BLOG for more information
  • If you have questions about applying for an FHA mortgage, please call Mike Gracz on 630-659-7644 or send an email to [email protected]
  • Mike will go over your qualifications with a one on one mortgage consultation

Mike will then pair you with a licensed loan officer who can assist you with your high balance FHA mortgage loan.

Starting The Pre-Approval And Mortgage Process

How the start of the initial acceptance process and the mortgage process works

Below is the documentation you should gather for your consultation phone call.

  • The downside to high balance FHA mortgage
  • Mortgage insurance is a requirement on every FHA mortgage product
  • Even if you put down 20%
  • If you’re looking to buy a home in a high balance area, you need to be ready to pay extra mortgage insurance
  • Most FHA mortgage loans use a 3.5% down payment
  • In a high balance area with a 3.5% down payment, your monthly mortgage insurance will be 105 basis points compared to 85 basis points in a non-balanced area

This is an added cost to allows FHA to offer these mortgage loans. The mortgage insurance is paid directly to FHA and this mortgage insurance keeps the FHA operational.

High-Balance Mortgage Process During The Coronavirus Pandemic

FHA high balance during the COVID-19 coronavirus outbreak.

  • Even during the pandemic, we are still offering FHA high balance mortgage loans without any additional LENDER OVERLAYS
  • We still only require a 580 credit score or above for a 3.5% down payment and have the ability to go down to credit scores as low as 500 with a10% down payment
  • As mentioned earlier in this article, we offer manual underwriting on FHA high balance loans
  • This may be the difference in buying a home today versus waiting 12 more months

The team at Gustan Cho Associates is available seven days a week to answer your mortgage questions. Even if you have been turned down by your current lender, please give us at Gustan Cho Associates a phone call to make sure you are not dealing with a lender overlay. Call or text Mike Gracz on 630-659-7644 or e-mail [email protected] for more information.

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