This BLOG On FHA Loan Limits In Chicago And Mortgage Guidelines Was UPDATED And PUBLISHED On April 22nd, 2020
Many home buyers, especially home buyers in Chicago and the suburbs of Illinois ask What Are FHA Loan Limits In Chicago. The Chicagoland Area consists of Chicago and its surrounding suburbs which are in six Counties of Northeastern, Illinois
- The answer to What Are FHA Loan Limits In Chicago has been often asked
- This is since the rumors that FHA was increasing the FHA Loan Limits nationwide went viral
- We will answer the question of What Are FHA Loan Limits In Chicago later on this article
- Here are the six Counties of the Chicagoland Area and its suburbs in Northeast Illinois
- Cook County: Cook County, Illinois is where the city of Chicago, Illinois is in
- Lake County: Lake County, Illinois borders the state of Wisconsin
- Large cities such as Gurnee, Illinois, Fox Lake, Illinois, Waukegan, Illinois are located
- Will County: Will County, Illinois is where large cities like Joliet, Illinois, Lockport, Illinois, New Lenox, Illinois, Romeoville, Illinois is located
- DuPage: DuPage County, Illinois
- McHenry: McHenry County, Illinois
- Kane: Kane, County Illinois
In this article, we will discuss and cover FHA Loan Limits In Chicago And Surrounding Areas.
FHA Loan Limits On Outskirts Of Chicago
The FHA has higher limits in Chicago and the six suburbs of Chicago, Illinois than other counties of Illinois.
- The current FHA Loan Limits For Chicago, as well as the surrounding Chicagoland and its six counties, was $368,000 for a single-family home
Here were the FHA Loan Limits For Chicago and surrounding suburbs where the Cook, Lake, Will, DuPage, McHenry, and Kane Counties are:
- Single Family Home FHA Loan Limits In Chicago And Surrounding Suburbs of Illinois $368,000
- Two Unit Properties FHA Loan Limits In Chicago And Surrounding Counties $471,100
- Three Unit Properties FHA Loan Limits In Chicago And Surrounding Counties of Chicago $569,450
- Four Unit Residential Properties FHA Loan Limits In Chicago And Surrounding Counties of Chicago $707,700
You can qualify and purchase for a one to four-unit property for an FHA loan in Chicago and the Chicagoland Area with a 3.5% down payment and a 580 FICO Credit Score.
About FHA Loans And Qualifying For A FHA Loan In Chicago And The Suburbs Of Chicagoland Area
What is an FHA Loan?
- Many first time home buyers often are not familiar with the mortgage loan process and rely on getting a home loan from the first mortgage lender they contact
- The mortgage loan officer will often times offer different mortgage loan programs that they may qualify for or may just tell them that they qualify for only a particular mortgage loan program
Two of the most popular mortgage loan programs in the United States are the following mortgage loans:
- Conventional Loans
- FHA Loans
We will cover What Are FHA Loans on this mortgage BLOG.
FHA Home Loans Explained
Here are the basics on FHA Loans:
- FHA Loans is by far the most popular mortgage loan program out today
- FHA Loans are mortgage loans that are originated, processed, underwritten, and funded by private banks and mortgage bankers who are FHA approved
- FHA, the Federal Housing Administration, is a subsidiary of the United States Department of Housing and Urban Development, is not a mortgage lender
- FHA is a governmental agency that insures mortgage loans to banks and mortgage companies who have originated FHA Loans that meet FHA lending guidelines
- FHA insures lenders in the event of borrower default on their FHA Loan and the home goes into foreclosure
- In order for a HUD to insure the FHA Loan of a Lender who has a borrower that defaults on his or her loan, the lender that originates and funds the FHA Loans needs to make sure borrowers has met all FHA Guidelines
Borrowers need to meet guidelines with respect to minimum credit scores, debt to income ratios, and other credit and income FHA mortgage guidelines.
Minimum FHA Lending Guidelines
FHA sets its own rules and regulations which are called FHA mortgage lending guidelines. Minimum FHA Lending Guidelines are as follows:
- The minimum credit score of 580 FICO credit scores to qualify for a 3.5% down payment home purchase
- Homes that are eligible are only owner-occupied homes that are one to four units
- Condominiums need the condominium complex to be FHA Approved
- Manufactured homes need to be on fixed concrete foundations
Mobile homes do not qualify.
HUD DTI Mortgage Guidelines On FHA Loans
Debt to income ratios are as follows:
- If your credit scores are 620 FICO or higher, the maximum back end debt to income ratios allowed is capped at 56.9%
- The maximum front end debt to income ratios are capped at 46.9%
- If your credit scores are under 620 FICO, then your debt to income ratios gets reduced to 43% DTI
Qualifying For FHA Loans After Bankruptcy
Borrowers of FHA Loans can qualify for an FHA Loan after the following:
- Chapter 7 Bankruptcy
- Chapter 13 Bankruptcy
- Deed In Lieu Of Foreclosure
- Short Sale
However, there is a mandatory waiting period to qualify for an FHA loan after the above.
Here are the waiting periods to qualify for an FHA loan after bankruptcy and foreclosure:
- There is a two year mandatory waiting period after a Chapter 7 bankruptcy discharge to qualify for an FHA Loan with re-established credit and no late payments after bankruptcy
- You can qualify for an FHA Loan one year into a Chapter 13 Bankruptcy Repayment Period with the approval of your Chapter 13 Bankruptcy Trustee
- There is no waiting period to qualify for an FHA loan after a Chapter 13 Bankruptcy discharged date
- There is a three year waiting period after a foreclosure, deed in lieu of foreclosure, and short sale to qualify for an FHA Loan
- The start date of the waiting period after foreclosure and deed in lieu of foreclosure is from the recorded date or the date of the sheriff’s sale
- Not the date the keys were surrendered to the lender
- The waiting period after the short sale starts from the date that is reflected in the short sale on the HUD Settlement Statement
- Non-Occupant Co-Borrowers are allowed
- More than one non-occupant co-borrowers are allowed by FHA to qualify for FHA Loans
100% of the down payment can be gifted by a family member or relative.
What Are FHA Loan Limits In Chicago In Versus Other Cities?
The FHA Loan Limits In Chicago Versus Other Cities remain the same because Chicago and its six counties of Cook County, Lake County, DuPage County, Will County, McHenry County, and Kane County have higher FHA Loan Limits than the rest of the counties in the state of Illinois. FHA Loan Limits In Chicago Versus Other Counties in Illinois are the following:
- Single Family Home $368,000
- Two Units $471,100
- Three Units $569,450
- Four Units $707,700
What Are FHA Loan Limits In Other Counties Of Chicagoland Area
Here are the FHA Loan Limits In Other Counties Of Illinois:
- Single Family Home $331,760
- Two Units $424,800
- Three Units $513,450
- Four Units $638,100
FHA Lender With No Lender Overlays In Chicago And Its Suburbs
If you are a first time home buyer or home buyer and have more questions on What Are FHA Loan Limits In Chicago and are looking for a lender with no lender overlays, contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster. Or email us at GCho@gustancho.com.
- My staff of loan originators and I are available 7 days a week, including evenings, weekends, and holidays
- There are two sets of FHA Lending Guidelines
- The main HUD Guidelines are the FHA Mortgage Lending Guidelines set by FHA
- The second set of FHA Guidelines are mortgage lender overlays that each individual FHA mortgage lender sets that can far exceed the minimum FHA lending guidelines
The answer to the question if all FHA Lenders have the same lending guidelines, the answer to that is no.
HUD Agency Guidelines Versus Lender Overlays
Just because you meet the minimum FHA Lending Guidelines set by FHA does not guarantee you an FHA insured mortgage loan by a lender:
- On the flip side, just because you are told you do not qualify for a FHA Loan by a particular mortgage lender does not mean that you do not qualify for a FHA Loan
- For example, all you need to qualify for a 3.5% down payment FHA Loan is a 580 FICO credit score
- However, most mortgage companies and banks will not qualify you for a FHA Loan with a 580 FICO credit score
- Many will require you to have a 640 FICO credit score or higher
- This is called a FHA mortgage lender overlay on credit score
- If you are told you do not qualify for a FHA Loan because you do not have 640 FICO credit scores or higher, no worries
You may not qualify for an FHA Loan with that particular lender but that does not mean you do not qualify for an FHA loan.