HUD Increases FHA Loan Limits Two Years In A Row

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HUD Increases FHA Loan Limits Two Years In A Row

This BLOG On HUD Increases FHA Loan Limits Two Years In A Row Was UPDATED On November 8th, 2018

The news that HUD Increases FHA Loan Limits again for two years in a row is great news for home buyers, home sellers, realtors, and loan officers nationwide.

  • Home prices have been rising nationwide
  • Many would be borrowers could not qualify for FHA Loans in many counties in the United States
  • This is due to higher home prices
  • FHA Loan Limits back in 2016 was $271,050 but HUD increased it to $275,665
  • Due to rising home prices, HUD increases FHA Loan Limits in 2018 to $294,515
  • Conventional Loan Limits used to be capped at $417,000  in 2016 but FHFA increased it to $424,100 for 2017
  • FHFA then increased conforming loan limits to $453,100 to $453,100 due to rising home prices
  • VA Loan Limits were also increased
  • VA follows conforming loan limits
  • Anyone who needed a higher priced home either had to do the following:
  • Since the FHA Loan Limits are now capped at $294,515, home buyers either had to come up with more down payment
  • Or try to qualify for Conventional Loans where the loan limit is now capped at $453,100
  • VA Loans is only limited to Veterans of the United States Military
  • VA Loans loan limit for 100% financing is $453,100

Rising Home Prices Remains A Major Issue

Home Prices are still increasing nationwide with no signs of correction despite high interest rates.

  • Many would be home buyers can afford higher mortgage loans
  • However, they often do not have the down payment. Loan Limits is a major hurdle and barrier for home buyers
  • Good news is Gustan Cho Associates at Loan Cabin Inc. launched non-qm loans with no loan limit caps

Here are alternative type financing for higher loan amounts:

  • NON-QM Loans with no loan limit caps
  • NON-QM Jumbo Mortgages With No Mortgage Insurance
  •  80-10-5 Piggyback Loan
  • Get a seller second mortgage from the home seller not to exceed 85% CLTV

The Federal Housing Administration, known by many as FHA, is a government agency under HUD, the United Department of Housing and Urban Development.

  • It is now official
  • HUD Increases FHA Loan Limits For 2017 from $271,050 to $275,665 and again in 2018 from $275,665 to $294,5151
  • With the news of HUD Increases FHA Loan Limits For two years in a row, home buyers will have a little more buying power
  • The main reason of HUD increasing the FHA Loan Limits is due to the consistent rise of home prices nationwide
  • FHFA, The Federal Housing Finance Agency, increased the Conventional Loan Limits in 2017 to $424,100 from $417,000 and again in 2018 to $453,100 due to rising home prices.

HUD Increases FHA Loan Limits Nationwide

HUD Increases FHA Loan Limits For 2017 nationwide to $275,665 from $271,050. HUD again increases FHA Loan Limits in 2018 to $294,515.

  • HUD Increases FHA Loan Limits For 2017 of $275,665 is for one unit properties nationwide in traditional average areas and not high cost counties
  • HUD Increases FHA Loan Limits for 2018 again to $294,515
  • FHA Loan Limit Increase is for 65% of the counties in the United States
  • Other counties that is above the $294,515 FHA Loan Limits are one unit homes in high cost areas throughout the United States
  • The FHFA, Federal Housing Finance Agency, also increased the Conforming Limits on Conventional Loans to $424,100 from $417,000 in 2017 and again in 2018 to $453,100
  • The FHFA also increased the Conforming Loan Limits For Conventional Loans to $636,150 from $625,500 in high cost areas in 2017 and again to $679,500 for 2018
  • This high cost Conforming Loan Limit increase is 150% of the traditional standard conforming loan limits on Conventional Loans

FHA Loans Versus Conventional Loans

Just a couple of years ago, FHA Loan Limits were floored at $410,000.

  • Then the lowering of the FHA Loan Limit to $271,050 was implemented
  • The reduction of the FHA Loan Limits was a major setback to many
  • It limited the buying power to $271.050
  • Borrowers now need to compete with Conventional Loans
  • The issue was that not all borrowers can qualify for Conventional Loans
  • HUD has much lenient credit and income guidelines versus conventional loans

Here are comparison of FHA Versus Conventional Loans :

  • FHA Loan Limits is now floored at $294,515 versus $453,100 for Conventional Loans
  • HUD requires 3.5% down payment requirement and minimum credit score of 580 FICO versus 3% to 5% down payment on conforming loans
  • HUD caps debt to income ratio up to 46.9% DTI front end, and 56.9% DTI back end for borrowers who have at least a 620 FICO credit score
  • Borrowers with credit scores under 620 FICO are capped at 43% DTI
  • Fannie Mae and Freddie Mac requires minimum credit scores at 620 FICO
  • Fannie Mae requires 50% debt to income requirements for an approve/eligible per DU FINDINGS
  • Freddie Mac also allow up to 50% DTI for an approve/eligible per LP FINDINGS
  • 2 year mandatory waiting period after Chapter 7 Bankruptcy discharged date versus Conventional Loans requiring four year waiting period
  • 3 year waiting period to qualify for a FHA Loan after the recorded date and/or sheriff’s sale date of a foreclosure and/or deed in lieu of foreclosure and/or short sale
  • Conventional Loans require four year waiting period to qualify after the recorded date of the deed in lieu of foreclosure and/or sheriff’s sale date or date of the short sale
  • 7 year waiting period to qualify for a Conventional Loan after the recorded date and/or sheriff’s sale date of a foreclosure

How Does HUD Determine FHA Loan Limits?

HUD determines FHA Loan Limits by collecting statistics and closed sales number from median properties that have sold and closed in particular counties.

  • According to the Federal Housing Administration, the maximum FHA Loan Limits has been raised by FHA in 2,948 counties
  • There was no reduction of FHA Loan Limits nationally
  • There were no changes in FHA Loan Limits in 286 counties in the United States
  • Reverse Mortgages Maximum Loan Limits will be capped at $679,500 nationally
  • Overall, this announcement is great news for home buyers, sellers, realtors, and mortgage lenders

Home Buyers who need higher loan limits can qualify with NON-QM Loans. Gustan Cho Associates at Loan Cabin Inc. offers 95% LTV Jumbo Mortgages With No Private Mortgage Insurance. We offer NON-QM Loans with no loan limits down to 500 FICO. Please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com.

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