If you aren’t aware of how FHA Loan Limits Help Potential Borrowers then this is the article for you. As you already know if you have read my articles, FHA Loans are the most popular loans that are closed and for good reason given their lenient guidelines and credit standards. If you want proof that FHA Loans are getting used by a lot of people, in 2015 (since 2016 data isn’t available as of this writing) there were over 750,000 FHA Loans closed. Just by this number alone, you can see how many families took advantage of FHA Loans pushing the popularity even more. Now, when looking at how FHA Loan Limits Help Potential Borrowers you will see that in 2017, FHA Loan Limits are on the increase and this news just keeps making FHA Loans that much more of a viable option for home ownership. If you are curious, in almost the entire U.S FHA Loan Limits have increased across the board giving families even more buying power in the areas they live and especially more power in the high-priced areas. If you think about one of the main benefits of an FHA Loan, it is a 3.5% down payment option and now people can purchase homes worth more than $500,000 with just $17,500 down.
As you can see, FHA Loan Limits Help Potential Borrowers but there is a reason behind why there are limits for FHA Loans in the first place. The FHA Loan Limits are put into place so that loans can be made for people who really need the loan or the “average borrower.” If you take the opposite argument, could you imagine the chaos if the millionaires could purchase multi-million dollar mansions with just 3.5% down instead of the Jumbo Loan down payments of up to 30%? Since these individuals would save so much money on down payments, they would easily take their cash elsewhere and simply invest it. These borrowers would be abusing FHA Loans in order to promote their investments in other areas. This is why FHA Loans are geared toward your typical borrowers and not the high net worth individuals. Let’s illustrate this with an example of a $3 million home. If this borrower could only put down 3.5% instead of 30%, this would save them over $750,000 freeing up a lot of cash for other activities. The key with these Jumbo Loans is for the borrower to have skin in the game with a hefty down payment in order for a loan to be made of such a large size.
As most of you know by now, FHA Loans offer some of the best and most borrower friendly guidelines of all loan programs offered. Just as FHA Loan Limits Help Potential Borrowers the program guidelines also boost the popularity of these loans. The basics are simple: You can obtain a 3.5% down payment loan with just a 580 FICO score, with a 620 FICO you can have a debt to income ratio of 56.9%, FICO scores under 620 will require a debt to income ratio of 43%, there are certain circumstances where you can obtain a loan with a 500-579 FICO if you have 10% down and other compensating factors, and one benefit that not a lot of people take advantage of is the FHA Loan is assumable meaning that no matter the current market circumstances a potential borrower can get qualified and take over your mortgage.
These are just a few benefits of FHA Loans and you can also see why FHA Loan Limits Help Potential Borrowers as well. These loan limits will insure that borrowers who truly need FHA Loans can utilize them for home ownership where they might not qualify or have the down payment for other programs. Here at Loan Consultants we stay on top of the ever changing mortgage guidelines and only want the best for our borrowers which is why we are available for you days, nights, weekends, and holidays. Please reach out today so we can get your mortgage process started with as little stress as possible. I look forward to hearing from you at 888-900-1020 or firstname.lastname@example.org.