Creative Financing 101 » HUD

New Limits Announced on FHA Mortgages

Jamie Beck — Tue, 03 Mar 2009 00:53:51 +0000

Recently, the Department of Housing and Urban Development released the new limits on FHA-insured mortgages. Previously, potential homeowners in some areas complained that they could not take out an FHA loan because properties in their county exceeded the loan limits. The increased limits are a result of legislation included in the new stimulus bill and are good through the end of the year (December 31, 2009).

According to a letter from this governmental organization, the lower floor on FHA loans (borrowers in lower-cost areas are able to take out a mortgage for up to this amount) are as follows:

One-Unit $729,750
Two-Unit $934,200
Three-Unit $1,129,250
Four-Unit $1,403,400

The ceiling on FHA mortgages for higher-cost areas has been raised in areas such as Los Angeles County, New York county, Salt Lake county, and DC. These limits are as follows:

One-Unit $271,050
Two-Unit $347,000
Three-Unit $419,400
Four-Unit$521,250

This is good news for credit worthy borrowers who can’t qualify for traditional loans because they don’t have a 20% down payment. FHA-insured mortgages allow borrowers to make a down payment as low as 3.5% and issuers are often able to overlook credit report flaws.

To find the FHA loan limit in your area, take a look at the HUD FHA Mortgage Limit Website.

See Also:

FHA Mortgage Guide

Answers to Common FHA Loan Questions

Buying Foreclosures with FHA Loans

Jamie Beck — Fri, 06 Feb 2009 02:46:32 +0000

Buying a home that’s been through foreclosure has the same requirements as purchasing any property. It is possible to take out an FHA loan to buy a foreclosure home. However, there’s one big problem: foreclosure properties are often so trashed that lenders won’t issue a mortgage for them.

I once walked through a home where the previous owner had recently been evicted. It was clear that he left unhappily, and probably against his will. Junk was piled everywhere, major appliances were missing, and windows were covered over with saran wrap. The carpets were soiled, the hardwood was scratched up, and I could barely breath because of the smell. Many lenders wouldn’t dream of issuing a loan for a home in that condition.

This is where an FHA mortgage can come in handy. They have a special lending product, called the HUD 203(k) loan that allows borrowers to include the cost of repair projects in the mortgage. The loan amount is actually based on the estimated value of the home after the renovations are completed.

The FHA only insures these loans, they do not offer them. So, it’s possible to take out an FHA mortgage from just about any major borrower. If you find yourself looking at run-down foreclosure properties, this may be one of your best options.

photo credit: TheTruthAbout…

See Also:

FHA Mortgage Guide

HUD 203(k) Mortgages