What Are 2015 FHA Loan Guidelines?

The Federal Housing Administration, a governmental agency under the United States Department of Housing and Urban Development also known as HUD, is a governmental agency, also known as FHA, that insures mortgage lenders in the United States who are FHA approved mortgage lenders against mortgage loan borrower defaults.  For a mortgage lender to approve and fund a FHA loan, the mortgage lender needs to follow the strict FHA mortgage lending guidelines or else FHA will not insure the mortgage lender against default on a FHA loan.  A home buyer can qualify for a FHA loan insured mortgage loan with as little as 3.5% down payment and with less than perfect credit and high debt to income ratios.

FHA Minimum Credit Score Requirements

The minimum credit score required to qualify for a FHA insured mortgage loan with a 3.5% down payment is 580 FICO.  Any mortgage loan applicant with credit scores between 500 FICO and 579 FICO can also qualify for a FHA insured mortgage loan, however, a 10% down payment is required.  Any FHA insured mortgage loan borrower with credit scores under 620 FICO, the maximum debt to income ratios permitted is 31% front end debt to income ratio and 43% back end debt to income ratios.  If your credit scores are greater than 620 FICO, you can have debt to income ratios over 46.9% front end debt to income ratio and 56.9% back end debt to income ratios.  You can qualify for a FHA insured mortgage loan after a two year waiting period after bankruptcy, three years after the recorded date of foreclosure and deed in lieu of foreclosure, and three years after a short sale reflected on the HUD’s settlement statement.  You can also qualify for a FHA loan with open collection accounts without having to pay them off as well as charge off accounts.  However, most FHA mortgage lenders want to see that you have been timely on your payments for the past 12 months.  One of two late payments in the past 12 months is not a deal killer but is frowned upon from the FHA mortgage lender.  Overdrafts in the past 12 months can be deal killers and your mortgage loan originator should not be submitting a mortgage loan application for processing and underwriting if he or she notices overdrafts in your bank statements.

FHA Releases 2015 FHA Loan Limits

FHA has released the 2015 FHA Loan Limits.  Unlike 2014, where FHA reduced 2014 FHA Loan Limits from $410,000 to $271,000,  2015 FHA Loan Limits for the highest cost areas and the lowest cost areas in the United States will remain the same for 2015 as it is for 2014.  For high cost areas like most parts of California such as Los Angeles, San Diego, Irvine, LaJolla, Torrance, Santa Monica, San Francisco, San Jose, Sacramento, Modesto, Lake Tahoe, and other parts in the country, the 2915 FHA Loan Limit will stay at the highest national limit FHA Loan Limit at $625,500.  For other parts of the country where it is considered low cost areas the 2015 FHA Loan Limit will stay at the current $271,050.

How Does FHA Calculate Loan Limits?

The Federal Housing Administration re-calculated the FHA loan limits every year.  The Federal Housing Administration calculates the FHA Loan Limits based on the percentage figures of the country’s conforming lending limit.  Based on the conforming lending limits, The Federal Housing Administration minimum national lending loan limit is set at 65% of the country’s conforming lending limit. The floor of the lending limits are areas where 115% of a home median price is valued at less than 65%  of the country’s conforming lending limit.

High Cost Areas And FHA Loan Limits

With areas that is considered high cost areas by the Federal Housing Administration are parts of the country where the lending limit surpasses the floor.  The highest FHA lending limit cap is set at 150% of the country’s conforming limit.  In regions, highest values of homes, where 115% of the home median price surpasses 150% of the conforming lending limit, the maximum FHA lending limit will stay at $150% of the conforming lending limit.

2015 FHA Loan Limit On Reverse Mortgages

The Federal Housing Administration has announce that the 2015 FHA Loan Limit on Reverse Mortgages will remain the same as those of 2014 which is capped at $625,500.  FHA Reverse Mortgages are Home Equity Conversion Mortgage and is often referred as HECM.  Reverse mortgages are available only to home owners who are at least 62 years of age and have equity in their homes.

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