Are There Mortgage Loan Limits: How Much Can I Borrow?

Mortgage Loan Limits

Gustan Cho Associates

There are maximum mortgage loan limits and minimum mortgage loan limits depending on the mortgage loan program you choose.  For a mortgage lender, the same amount of work goes in to process and underwrite a $50,000 mortgage loan as it is to process and underwrite a $400,000 mortgage loan.  Mortgage lenders get paid based on a percentage of the mortgage loan size and most mortgage lenders will try to deter from processing and underwriting a smaller mortgage loan amount.  A $50,000 mortgage loan application is exactly the same as a $400,000 mortgage loan application and requires the exact the same amount of work.  But a mortgage lender will only make $500 dollars on a $50,000 mortgage loan compared to $4,000 on a $400,000 mortgage loan.  The only difference between a $50,000 mortgage loan and a $400,000 mortgage loan is just the inputting of the numbers.

Minimum Mortgage Loan Amount

The minimum mortgage loan amount varies from one lender to another.  Most mortgage lenders will not touch any mortgage loan size under $100,000.  Other mortgage lenders will go down as low as $50,000 mortgage loan amount.  Most mortgage lenders do not like mortgage loan amounts under $100,000 because whether you do a mortgage loan of $100,000 or one million, the same work is required and many mortgage lenders are not profitable when processing and underwriting a mortgage loan with a under $100,000 balance.  Most mortgage loan originators may not take on a mortgage loan applicant who has a mortgage loan size under $100,000 even if their mortgage company may allow mortgage loans of under $100,000 due to the fact that it takes so much time in processing and underwriting a small mortgage loan size compared to the compensation.  With me, I look at the big picture and will even process and underwrite a mortgage loan under $50,000.  Even though I may be doing the work for free, I think of every client as a lifelong client and referral partner where if I take care of them, they will come back to me and will refer their friends, family, and business associates to me.  Just because a mortgage loan applicant has a $50,000 loan and I do a lot of work for next to nothing does not mean that I worked for free.  I invested in the client and developed a relationship.

Real Estate Agents

Same with real estate agents.  Real estate agents get paid on a percentage of the purchase price of a property.  Real estate agents will make very little on a $50,000 property and many real estate agents will steer the home buyer to a higher priced home or not want to represent a home buyer who can only afford a lower priced home due to the amount of work it entails.  However, real estate agents who really truly care for their home buyers and have a bigger vision will not consider the commission and their main goal is helping the home buyer in locating a home that they could afford and develop a lifelong business relationship with the home buyer.

What Is The Maximum Mortgage Loan Limits?

Every mortgage loan program has maximum mortgage loan limits.  However, if you do not qualify for one mortgage loan program, you can go with another mortgage loan program that has a higher mortgage lending limit if you qualify to the higher lending loan limit mortgage lending program.  For example, FHA recently lowered it mortgage loan limits from $410,000 to $271,000 in all counties in the United States except for areas designated as high cost areas, which are higher than the maximum FHA mortgage loan limits but depends on what county the property is located.  Conventional loan programs mortgage lending limits are at $417,000.  If the property you are trying to buy is over $300,000 and you only have a limited amount for the down payment, you can try to see if you can qualify for a conventional loan versus a FHA loan.  However, you need to qualify for the conventional loan.  Conventional loan qualification requirements are not as lenient as FHA loan programs.  For those who want to purchase higher end homes that exceed the $417,000 conforming mortgage loan limits unless the property is located in high cost areas may need to resort to portfolio loans or jumbo mortgages.  There are jumbo mortgage loan programs that only require 10% down payment.  Jumbo mortgages have much tougher mortgage lending qualification requirements with regards to credit scores and debt to income ratios.  Most jumbo mortgage lenders will require a minimum of 700 FICO credit scores and debt to income ratios not exceeding 40% DTI.

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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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