HUD Increases 2021 Limits On FHA Loans To $356,362 On SFH

This ARTICLE Is About HUD Increases 2021 Limits On FHA Loans To $356,362 On SFH

Many so-called housing experts and forecasters were wrong again.

Countless housing and economic experts and economists predicted the housing market will go through a major market. HUD Increases 2021 Limits On FHA Loans after the coronavirus outbreak pandemic economic downturn hit the nation in February 2020. Many believed these housing experts and everything seemed to make sense. Home prices have been skyrocketing for the past seven years.

What goes up normally comes back down. At least in the housing market, the sudden rapid rise in home prices in such a short period of time is a sign of a housing bubble. The rapid fast appreciation of homes is a concern to government mortgage agencies such as FHA, VA, USDA. Fannie Mae and Freddie Mac is concerned as well about the rapid growth of housing prices. All government agencies are doing everything possible to avoid another housing and credit meltdown.

HUD reduced the loan to value cap from 85% to 80% on cash-out refinance FHA loans. The Veterans Administration reduced the loan to value cap from 100% to 90% LTV on cash-out refinance VA loans. The Federal Housing Finance Agency (FHFA) and HUD have increased Conforming and FHA Loan Limits for the past five years due to the skyrocketing home prices nationwide. There is more demand versus inventory of housing. To add fuel to the fire on a hot housing market, mortgage rates are at a historic low.

After the Federal Reserve Board lowered interest rates to zero percent, mortgage rates plummeted hitting new record lows for the past six months. Mortgage rates are expected to remain the same and/or lower for the next 18 to 24 months. The whole country is going through a refinance boom. Most lenders are at full capacity in taking new mortgage loan applications due to the sheer volume of new loans. It normally takes 45 days to close on a  purchase and 90 days to close on a refinance loan application due to the historic volume of applicants.

Home prices are continued to increase with no signs of a housing correction. HUD and the FHFA keep on increasing the FHA and Conventional Loan Limits due to so many homebuyers being priced out of the market due to escalating home prices.

In this article, we will discuss and cover HUD Increases 2021 Limits On FHA Loans To $356,362 On SFH.

HUD Increases 2021 Limits On FHA Loans To $356,362 After The FHFA Increases 2021 Conforming Loan Limits To $548,250 On Single-Family Homes

On Wednesday, December 2nd, 2020, HUD (the parent of FHA) announced the new FHA loan limits to the single-family home loan limits for 2021.  The new FHA loan limit for 2021 on FHA loans will increase to $356,362 from $331,760. Many counties throughout the country have higher home prices than regular areas. This holds especially true for many counties in California, New Jersey, and Colorado. HUD has always set higher loan limits on FHA loans in high-cost counties. HUD increased the loan limit on high-balance FHA loans in high-cost areas to $822,375 from $765,600. The bottom line is the new 2021 FHA loan limits will increase in 3,108 counties. In 125 counties, FHA’s loan limits will remain unchanged. For Alaska, Hawaii, Guam, and the Virgin Islands the ceiling will be $1,233,550. The new 2021 FHA loan limits take effect on January 1st, 2020.

Mike Gracz of Gustan Cho Associates is an expert on HUD Agency Guidelines and FHA loans. Mike Gracz advised the following:

If you wish to appeal a limit decision regarding your area, you can submit to [email protected](link sends e-mail) with the subject line of 2021 Loan Limits Appeal no later than January 1, 2021. Requests for a change will only be considered for counties for which HUD does not already have home sales transaction data for the calculation of mortgage limits. Any changes in area loan limits because of valid appeals will be in effect retroactively for case numbers assigned on or after January 1, 2021.

One of the biggest problems many homebuyers have with FHA loans is due to the loan limit being substantially lower than conventional loans. You can get almost $200,000 more in buying power with conventional loans. FHA loans benefit borrowers with lower credit scores, outstanding collections/charged-off accounts, and higher debt to income ratios. FHA loans are the easiest loan program to get an approve/eligible per automated underwriting system for borrowers with larger collections/charged-off accounts and higher debt to income ratios. Gustan Cho Associates has no lender overlays on government and conventional loans. Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify at other lenders due to their lender overlays.

Gustan Cho Associates just go off the automated findings of the AUS and have no additional lender overlays. We have a national reputation of being a one-stop mortgage shop. Besides not having any lender overlays on FHA, VA, USDA, and Conventional loans, Gustan Cho Associates has over two dozen relationships with non-QM wholesale lending partners. Some of our popular loan programs include 12-month bank statement mortgages, non-QM jumbo loans, asset-depletion loans, fix and flip loan programs, and dozens of other non-QM and alternative loan programs not offered anywhere else. To qualify for a mortgage with a mortgage company with no lender overlays on government and conventional loans, please contact us at Gustan Cho Associates at [email protected] Or call us at 262-716-8151 or text us for a faster response. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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