HUD Increases FHA Loan Limits For 2017

This BLOG On HUD Increases FHA Loan Limits For 2017 Was Written By Gustan Cho

The news that HUD Increases FHA Loan Limits For 2017 is great news for home buyers, home sellers, realtors, and loan officers nationwide. Home prices have been rising nationwide and many would be FHA borrowers could not qualify for FHA Loans in many counties in the United States due to higher home prices and the cap of FHA Loan Limits at $271,050. Conventional Loan Limits is capped at $417,000 and so are VA Loan Limits. Anyone who needed a higher priced home either had to do the following:

  • Since the FHA Loan Limits were capped at $271,050, home buyers either had to come up with more down payment or go for a Conventional Loan where the Conventional Loan Limits were capped at $417,000
  • Get a VA Loan but VA Loans are only limited to Veterans of the United States Military. VA Loans had a VA Loan Limit Cap of $417,000
  • Get a 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. With the news of HUD Increases FHA Loan Limits For 2017, home buyers will have a little more buying power. The main reason of HUD increasing the FHA Loan Limits in 2017 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 due to rising home prices.

HUD Increases FHA Loan Limits For 2017 Nationwide

HUD Increases FHA Loan Limits For 2017 nationwide to $275,665 from $271,050. 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. The $275,665 FHA Loan Limit Increase is for 65% of the counties in the United States. Other counties that is above the $275,664 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. The FHFA also increased the Conforming Loan Limits For Conventional Loans to $636,150 from $625,500 on high cost areas. 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 where it limited the buying power to $271.050. FHA borrowers now need to compete with Conventional Loans but the issue is that not all FHA borrowers can qualify for Conventional Loans. FHA 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 $275,665 versus $424,665 for Conventional Loans
  • FHA requires 3.5% down payment requirement and minimum credit score of 580 FICO Credit Scores
  • FHA 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. FHA 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 45% debt to income requirements for an approve/eligible per DU FINDINGS
  • Freddie Mac will 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 to qualify for  Conventional Loan after a Chapter 7 Bankruptcy discharged date
  • 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 for a Conventional Loan 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?

The Federal Housing Administration, or FHA, normally 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, and there were no changes in FHA Loan Limits in 286 counties in the United States. Reverse Mortgages Maximum Loan Limits will be capped at $636,150 nationally.  Overall, this announcement is great news for home buyers, sellers, realtors, and mortgage lenders.

 

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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