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FHA Limits Restored

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This just in from the National Association of REALTORS® News Desk: Congress has restored the loan limits for the FHA for two years.

Back in September we let you know that the loan limits had been reduced in over 40 states. Effective immediately, these limits have returned to the previous levels.

For San Antonio, this means that the limit of an FHA home mortgage is once again:

$337,500

The reinstated FHA loan limit should help to keep mortgages affordable and accessible. FHA morgtgages require one of the the lowest downpayment of any traditional mortgage currently on the market (3.5%) and their presence in the market is critical as we work towards a housing market recovery.

If you have questions about FHA loans, contact a professional REALTOR® or mortgage broker for specifics.

image courtesy of krissen

FHA Loan Limits Drop

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HUD Building

Effective October 1, 2011, the loan limit on a FHA (government backed) mortgage on a single family home in Bexar County dropped from $332,500 to $287,500. The numbers, released by HUD and the FHFA have the potential to substantially affect the availability and affordability of mortgage credit.

FHA loans have been one of the most popular loan types in recent years, particularly for first time home buyers, due to their low downpayment requirement (currently 3.5%). The new, lower limit means that buyers will either have to come up with substantially more cash as a downpayment,or that many homes may suddenly be out of reach to many home buyers.

FHA loans have typically required a minimum of 3.5% investment by the buyer (downpayment). This means that anyone seeking to purchase a home with an FHA mortgage in Bexar County can no longer spend more than $297,927.47 on their home purchase with the minimum downpayment. ($10,427.47 downpayment and a loan of $287,500). Previously these same buyers could possibly have financed a loan on a property up to $344,559. That’s over $46,000 difference in home buying power for these types of buyers.

Alternative loan programs (non-conforming or “conventional”) require as much as 5% down before potential buyers could be eligible.

Forty two states contain counties that have been negatively impacted by these limit adjustments. San Antonio is not alone in feeling the pinch from the latest round of lending crackdowns.

What this means to you:

Buying a home: If you were considering an FHA backed mortgage, consult with your lending professional to see how these recent changes impact your specific loan situation. Adjust your home search criteria if necessary to take these new limits into consideration. Look for additional funds for downpayment that may open new finance options to you.

Selling a home: Homes priced in the $300,000-350,000 price range are most substantially affected, as the pool of financing options for potential buyers has been severely limited. Consider your price points and potential buyers. If these limits do make a difference, consider altering some of your marketing strategies to better target your new buyer pool. Be prepared for even strong buyers to struggle with some of the new regulations on the mortgage industry.

image courtesy of matturick