FHA mortgage loans & limits?

Posted on Aug 18, 2023 in FHA Information

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Question by PhoenixJim: What lenders do an FHA mortgage with less than 3 years foreclosure seasoning given extenuating circumstances?
The HUD handbook says it can be done, information pills but every lender I have talked to says they have never seen it done. Also, sick please don’t reply back with a rude remark about how people with a foreclosure never deserve to buy again, etc.

Best answer:

Answer by loanmasterone
As I understand your question is you had a foreclosure about 3 years ago and now want to purchase a new home underwritten by FHA mortgage. All the mortgage brokers so far are telling you this is not done, yet the HUD handbook say it can be done.

You need to find a mortgage broker that do FHA loans that understand the nuances of doing a FHA backed mortgage loan with a previous foreclosure or call a local HUD office to get an interpretation of the HUD pamphlet or a list of local mortgage loan officers that understand the meaning of the pamphlet.

Normally, after 3 years and with a strong letter of explanation as to why you had a foreclosure, you could apply for a mortgage loan.

Of course with the pamphlet indicating you might apply, you- must still qualify with the proper credit scores, rebuilt credit and a minimum of three credit trade lines on your credit report. You should make sure you meet the minimum qualifications prior to applying for a mortgage loan.

I hope this has been of some benefit to you, good luck.

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Question by Anon Speaker: FHA mortgage loans & limits?
We are looking into buying a new house in the mid-$ 400k’s before we sell our current home, viagra buy but this means that we would need a larger loan and that we would have less cash available up front for closing costs and downpayment. Buying before we sell our home means that after all the closing costs, story we would only have 3.5% – 4.5% as a down payment.

I don’t want to give my state/city-county because that is too much personal information for a Q&A site, but I already checked and the HUD website’s FHA loan limits in the area where we would buy the new house are: FHA Forward $ 271,050 ($ 280,000) —AND— Fannie/Freddie $ 417,000. Depending on the offer that is accepted, we’d need to borrow between $ 425,000 and $ 435,000, and again, we’d have 3.5% and 4.5% for a down payment (after we pay closing costs).

We’ve talked to 2 lenders who only discussed FHA loans since apparently only FHA loans will allow as small as a 3.5% – 4.5 % downpayment:

(1) Lender #1 told us we have no choice but to get a conventional loan since we cannot get an FHA loan for more than $ 280,000 — end of story. He said there is absolutely no FHA loan available for loans over $ 280,000. As for non-FHA loans, Lender #1 said there is a cap for conventional loans of $ 417,000, and even then, we’d have to have a 12% down payment. In other words, we MUST sell ours first to have enough cash for closing/down payment.

(2) Lender #2 said we can borrow up to $ 450,000 on an FHA loan as long as we have a 3.5% down payment because our debt-to-income ratio is good enough. He said there is no $ 280,000 or $ 417,000 limit on FHA loans when the loan is a jumbo (aka, “non-conforming”) FHA loan. The debt-to-income ratio is all that matters.

What?! Something seems really wrong with what we’ve been told since the two lenders seem to contradict each other on the FHA “facts.” We understand that different lenders will only finance conventional loans under the terms they set, but the FHA rules are rules – they can’t be different from lender to lender?

Can someone explain and make some sense out of this?
Add’l details: The house is NOT in a high-cost area.
Answers #1 & #2 have already responded to my questions on point, but if others want to respond, please feel free to do so. Don’t be misled by GVD’s lack of comprehension, though; I’m not looking for rate quotes, I’m clearly not soliciting a loan from anyone on this site, & I’m intelligent enough to have provided the accurate limit information in my question. Thus, you may rely on my facts to provide answers to my questions.

Best answer:

Answer by KL
There is such a thing as a Jumbo FHA loan, but they are only available in high-costs areas. Either the 1st lender didn’t know you were in a high-cost area or the 2nd lender thinks you are.

But…if you’ve already checked HUD’s website and found your FHA limit is $ 281,050 then it sounds like you are NOT in a high-cost area and won’t be eligible for the higher financing amount.

Know better? Leave your own answer in the comments!

2 Comments

  1. FHA loans have basic requirements; however, each lender can specify more specific criteria for these loans – which is why you will always get different answers. This site: http://www.fha-home-loans.com/loan_qualifying_fha_loans.htm will give you the few basic regulations of an FHA loan. Jumbo loans kick in at $ 417,000… and you will have higher interest rates for these loans. It would be in your best financial interest to put enough down to bring your loan under $ 417,000.

    FHA rules can be different for each lender, as long as they still follow the basic regulations that have been set. A lender has a right to set any rules it wants because ultimately if you default on the loan… they lose.

  2. KL is correct and you will need to provide at least what zip code you are buying in if you want anyone to be able to assist you. Not sure how providing a zip code is personal, but it’s your choice. If you give that much info we can tell you exactly what you can borrower and with how much down.

    FYI, you can get a conventional loan up to $ 417,000 with 5% down just about anywhere.

    Response to EDIT:
    That does not tell us anything, we don’t know if your limit is $ 417,000 or $ 280,000 as you say. If you are not willing to provide even the most basic information for someone to help you, don’t waste people’s time asking. Mortgages are not like ordering a #3 at McDonalds; you have to provide more input to get an informed answer.

    Good luck to you.

    2nd EDIT: Not sure how your question was addressed because you were asking which person was correct in the information they gave you. That is impossible to answer without knowing where you are. If you already knew your FHA limit, why did you need sense made out of it?

    If you think I was soliciting you, trust me, I don’t solicit people here, my clients find me when they need real answers! I only work in California and from the sound if it, you are certainly not here!

    Again, best of luck to you!