After the recent announcement of the conforming loan limits increase, FHA has now announced their own increase. Housing prices have continued to climb which is a good thing to owners, but can be a struggle for home buyers. As a buyer sits on the sidelines as a renter or living with family, prices are rising. This affects housing payment affordability. In order to combat this potential roadblock for homebuyers and keep up with the price increases, FHA loan limits are increasing for 2018.
HUD Announcement Takes Place on January 1, 2018
As stated on the HUD.gov website, FHA issued Mortgagee Letter 17-16 that increases FHA loan limits. These new limits are effective with new FHA case file numbers issued 1/1/2018 or after. So, what does that mean? It does not mean FHA closings on 1/1/18 or after. Rather, it is when a lender requests the FHA case file which is part of the early FHA loan process. Typically, lenders request the case file ID just before ordering the appraisal. Keep in mind that this change does not affect most FHA borrowers. It only affects borrowers looking to borrow over the prior limits.
2018 FHA Loan Limits
As stated in a recent Housingwire.com article, “Back in 2016, the FHA increased loan limits for just 188 counties. Then, in 2017, this number jumped to 2948 counties that saw an increase. And now, the number of counties increased even further to 3,011 counties for 2018.”. The lowest FHA limit for single family housing has increased to $294,515 compared to $275,665 for 2017. In addition, the high cost FHA loan limits are increasing. The minimum high cost limit is increasing from $636,150 to $679,650 for 2018.
2018 FHA Loan Limits for Low & High Cost Areas
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Looking to Borrow Over FHA Loan Limits?
Although FHA limits will cover many homebuyers, there are plenty that want to finance over these amounts. Luckily, there are still great, affordable mortgage options available in this range. For instance, conforming loans now allow for borrowing to $453,100 for single family residences. While other higher cost areas allow for much higher limits. Conforming loans offer many advantages such as
- No mortgage insurance options
- Waiver of escrows
- 3% down payment
- Fixed and adjustable rates
- Flexibility in guidelines
These are great features and when we say flexibility, we really mean flexibility. For instance, self employed or commission borrowers may qualify with just one year of tax returns. Additionally, borrowers with student loan debts in income based repayment (IBR), there are special guidelines to help these borrowers qualify for a mortgage.
USDA Loan Limits are Higher Than FHA
In most areas of the country, USDA will actually lend higher loan amounts than FHA. Besides that benefit, USDA is 100% financing plus offers a lower guarantee fee and mortgage insurance fee. Basically, if a buyer qualifies for a USDA loan, it is typically the better option because it is no money down and generally cheaper expenses. Ask us about USDA options. We will compare FHA, USDA, and another potential options for you.
VA Loan Limits are Higher than FHA Loan Limits
Not only do VA loans typically not require a down payment, there is also no monthly mortgage insurance. Additionally, there is even an opportunity for no VA funding fee for disabled Veterans. VA loan limits mirror conforming loan limits, but we will also allow VA loans up to a $1,000,000 loan size. That is quite a feature, but that doesn’t even touch the surface of the many VA benefits! Other benefits include…
- Very flexible student loan guidelines
- Flexible credit requirements
- Short time since foreclosure, bankruptcy, and short sale allowed
- Higher debt ratios allowed
- Manual underwriting options & more!