As expected, FHA announced their increased loan limits for the coming year. Unlike conventional loans, the increase is not as dramatic.
Remember, FHA maximum loan amounts depend on the area where a home is being purchased. The maximum allowed amount in New York City would not be the same as rural Alabama. For metro Atlanta counties, the new limit will be $412,850 (up about 3% from 2020).
It is nice the FHA loan limit went up for the coming year, but we didn’t see the same increase conventional loans got… FHA loans basically got a standard cost of living adjustment. Still some is better than nothing.
While home buyers can begin using the raised limits now, I think we can all say 2021 can’t get here fast enough!
Why stop there?!? We will keep it going for a conventional loan programs with small down payments. I’ll touch base on the new guideline compared to the previous requirements.
NEW: When making less than a 5% down payment on a conventional loan, if all borrower’s on the loan are first time home buyers, one of the borrowers must complete a homeownership education course.
Previously there was no education requirement for those putting less than 5% down to purchase a home. Note if one of the buyers has previously owned a home, then there is no education requirement regardless of the down payment amount.
For those keeping score at home, a “first time home buyer” is defined as anyone who has never owned a home OR has not owned a home in the past three years. If the last home you owned was more than three years ago, then you are now a first time home buyer.
NEW: Home Ready loans no longer require the homeownership education course if one of the occupying buyers has previously owned a home (again, means has owned a home in the past 3 years).
Prior to the change, one borrower had to complete the education course even if they had previously owned a home.
NEW: The homeowner education course is free if the borrower’s use this link – https://educate.frameworkhomeownership.org . Note if using another accepted education course, there may be a non-refundable fee of $75.
Prior to this change, the cost of the course was $75 to everyone regardless of where the course was completed.
New years… new changes… a lot to keep up with… your head spinning? Don’t worry! It is my job to keep up with the changes.
The Spring Market is upon us. If you are ready to get out and purchase a home in 2020, contact me today. If the property is in Georgia, I can get you ready to make an offer in just a few minutes. You can be well on your way to owning a new home faster than you’d ever expect!
In early December, I mentioned the maximum loan amount for conventional loans will increase from $484,350 to $510,400 in 2020. FHA followed suit and increase their maximum loan amounts.
One thing to remember about the maximum FHA loan amount is the amount varies from county to county. The max loan is based on the average home values in each market. The loan amount range across the US goes from $331,760 to $765,600.
To find your area, you can use the search tool created by HUD. Be sure to change the Limit Year from “CY2019” to “CY2020” in order to see the new maximum amounts.
For the Atlanta metro area, the new maximum FHA loan amount will be $401,350. This is about a 5% increase over the current limit of $379,500. With these increases, a buyer can now purchase a home in metro Atlanta:
$415,000 purchase price with 3.5% down using an FHA loan.
As we celebrate the new year, it is also time to celebrate more buying power in the housing market!
Are you thinking about buying a home in 2020? Want to get a head start? I’m already working with clients who are ready to purchase home. The spring market has started! If you are buying a home in the state of Georgia, contact me today. You can be ready to make an offer on a home in no time at all.
For the fourth consecutive year, the conforming loan limit is rising for 2020!
Historically, this is the normal trend of conforming loan limits as the maximum conventional loan amount increased almost every year from 1980 to 2006. Then 2007 arrived…
From 2007 to 2016, the conventional loan limit remained steady at $417,000. With the housing crash and slow recovery, FHFA held the maximum amount steady for a decade. We experienced a modest increase in 2017 followed by more substantial increases for the next few years.
2017 max limit was $424,100 (up from $417,000 for only about a 2% increase)
2018 max limit was $453,100 (about a 7% increase)
2019 max limit was $484,350 (another increase of about 7%)
the new 2020 maximum conventional loan limit will be $510,400, which is just over a 5% increase from this year.
Since one only needs a 3% down payment to qualify for a conventional loan, this means buyers can purchase a $526,000 home with only a $16,000 down payment! With 2020 just around the corner, we can begin using the new limits.
With the conforming loan limit increase, we can also expect the maximum FHA loan limit to increase as well (currently at $379,500 for metro Atlanta). Once FHA makes their formal announcement, The Mortgage Blog will update you on it too!
Ready to get a jump on the spring market for 2020? The spring market is already starting! If you are looking to purchase in the state of Georgia, contact me today. I can get you prequalified and ready to make an offer on your new home in minutes!
Just as conforming loan limits rose again this year, the maximum loan amount for FHA loans got a bit higher too.
Remember the maximum loan amount for FHA loans vary from county to county; meaning, the max loan amount is determined by the county in which the property resides.
The new FHA loan limit for 2019 is $379,500 for the metro Atlanta area.
The non-metro max loan amount also increased to $314,827.
Georgia also has some counties with max amounts between those ranges (for example, Clarke county is $341,550).
For those who want to see their specific county, use this lookup tool provided by HUD. Just choose your state and county then press “send” to get the exact amount.
The new limit for metro Atlanta counties means a buyer could purchase a $393,000 home and make just a 3.5% down payment. Buyers can look to purchase a home for more than $393,000, but they will need to make a larger down payment. For example, a person could buy a $400,000 home using an FHA loan. Since the max loan is capped at $379,500, the down payment will need to be about 5% instead of the minimum 3.5%.
I know what you may be thinking… why put 5% down and use an FHA loan? Wouldn’t a conventional loan be better? True. Maybe. Remember for those with credit scores under 680 who make a 5% down payment, the private mortgage insurance for a conventional loan is higher than the monthly mortgage insurance for an FHA. Also, the mortgage rate is higher for the conventional loan versus the FHA loan.
This is why it is imperative to speak with a licensed mortgage lender about the differences in loan programs instead of assuming an FHA loan is only for first time home buyers OR never consider an FHA loan if you can make a 5% down payment. The specific details of each client’s situation could make one program more attractive than the other even if it goes against what most people would consider normal.
Looking to purchase a home in the state of Georgia? Unsure of the loan program that is right for you? Contact me today. I can get you prequalified for a home loan in a few minutes, and we’ll discuss the pros and cons of each loan program to ensure the best fit for your situation.
Now that we’ve talked about the aspects of a mortgage payment, let’s focus on the mortgage options. There are so many mortgage options from which to choose – how do you decide which loan is best for you?
To contact any of us at Dunwoody Mortgage Services, click here!
As many in the industry know, refinances dwindled in 2014. Freddie Mac recently stated the “official” end to the refinance boom after the second quarter 2014. Freddie Mac goes on to say the purchase market has increased drastically this year, and the industry is now in its first dominated purchase market since 2008.
Realistically, Freddie Mac’s announcement is about a year behind. In early May 2013, interest rates began to rapidly climb. By the time the dust settled in mid June, rates had jumped over 1.25% from the low 3’s to the mid 4’s for a 30 year fixed rate loan. From the beginning of 2013 through the end of May 2013, refinances were over half of my business each month. Since June 2013 through August 2014, refinances only account for 20% of my business.
But why?!? Interest rates are still low. What many do not know is rates improved in 2014 and are currently lower than they were at the end of 2013. Also, some homeowners are still underwater in their homes. Don’t forget that HARP (Homes Affordable Refinance Program) still exists. Qualifying homeowners can refinance regardless of how far underwater they may be.
Rates are not as low as they have been now compared to early 2013. That doesn’t mean you should write off the possibility of refinancing altogether. If your home is in the state of Georgia, shoot me a quick email. We can talk about the pros and cons of refinancing by answering a few questions. You never know until you ask.
Over the past couple of months, I’ve closed a couple 203k streamline loans. I figured now is a good time to talk more about the program itself.
The 203k Streamline loan rehabilitation loan from FHA that allows a borrower (purchase or refinance) to put a little bit of “tender loving care” into a home that needs some updating. There are two versions of this loan. Let me talk about both so there is no confusion.
The first version is simply called the FHA 203k loan. There is no cap on the amount of work that can be done to the home (so long as the home appraises high enough). The borrower can also make structural changes to the home. This loan program takes a longer time to get through underwriting and may require multiple appraisals. This adds up to making it a 45-60 day closing time frame.
A quicker way is using the FHA 203k streamline program. The Streamline version has a cap on the amount of work that can be done. The program also requires a 10% contingency reserve in case the work goes over budget. The cap is $35,000, and 10% of that amount is $3,500. Since almost every one chooses to finance the 10% contingency reserve, that leaves roughly $31,500 for the renovations. Once the work is complete, any excess funds left over in the contingency reserve will be deducted from the loan amount.
The advantage of using the Streamline version is it allows for a quick closing time (around 30-40 days), and an easier time through underwriting. The main drawback is the cap on the amount of money that can be used for renovations.
Here are some bullet points about the FHA 203k Streamline:
allows up to $35,000 worth of work that can be done on the home (roughly $31,500 if financing the 10% contingency reserve)
the Streamline program allows for a variety of items to be repaired/replaced/updated (roof, windows, siding, flooring, fixtures, appliances, HVAC, etc.).
the Streamline program will not allow any structural changes to the home. This means walls cannot be taken out to open up the floor plan.
other allowable improvements can include mold remediation, lead-based paint stabilization, septic system repair/replacement
borrowers can choose to add exterior decks or patios
money can also be used to modify a home for persons with disabilities
As you can read, there are a lot of advantages and goals that can be accomplished using the 203k streamline loan. If you are buying a property in the state of Georgia, and would like to know more, contact me. We can talk about the details of the program and see if the FHA 203k Streamline loan will fit your needs.
While summer has begun, it won’t be too long before people begin to plan on buying a new home for the fall… a chance to be in a new home for the Thanksgiving… the holidays… New Years. The fall may seem like it is far off, but it will be here before we know it.
For the month of June, my posts to The Mortgage Blog will focus on the four aspects of buying a home. We’ll start today with a qualifying credit history/credit score.
When it comes to credit scores, there are different requirements based on the loan program being used. For the most part, borrowers use either a Conventional loan or an FHA loan to buy a home. I will focus on these to loan programs.
– Conventional loans require a minimum credit score of 620. There is not a specific trade line requirement for conventional loans. You don’t need a certain amount of active credit accounts, nor do these accounts need to be open for a specific period of time. Speaking specifically about credit scores, as long as a borrower has a 620+ credit score and receives an Approve/Eligible through Automated Underwriting, they are good to go!
– FHA loans technically require a 580+ credit score to receive the maximum financing allowed under FHA guidelines, but it is tough to find a lender who will do an FHA with a credit score that low. There are lenders who will approve an FHA with a credit score as low as 600, but most lenders require a 640+ credit score. In addition to the credit score, FHA loans requires a minimum amount of trade lines (credit accounts) on a report. While a borrower doesn’t need 2 active trade lines that are a year old, they need to have 2 trade lines that are/were active for at least 12 months in the past 3 years. Note that student loan payments that are in deferment or authorized user credit card accounts do not count toward the 2 trade line requirement.
As you can read, a perfect credit score isn’t required to purchase a home. In fact, a credit score of 620-640 would be considered “poor” by online credit agencies. As we’ll discuss next week, a 620 credit score with only a 5% down payment can get you into a new home.
If you are reading this and thinking about a new home for the holidays, I would be happy to help you get the process started. Contact me today. if you are buying a home in Georgia, I can help you buy that home!
At the beginning of 2013, I wrote a blog post mentioning how the government wants to pull back (not out) of the mortgage industry in terms of the number of loans they insure. One way they hope to accomplish this (as mentioned in the post earlier this year) is to increase the mortgage insurance premiums on FHA loans. See the link above for the full post.
Another sign the government is attempting to scale back is the recent announcement that FHA maximum loan amounts will be reduced. Expect to see the counties with the highest FHA loan limits of $729,750 to reduce by roughly 14% to $625,500. The reduction in other areas/counties of the country has yet to be determined. FHA also announced that areas where the housing market has not recovered as much will not see a reduction in the maximum loan amount.
This is actually a good sign for the housing market and mortgage industry overall. The government stepped in and expanded the availability of FHA loans during the housing crisis. Now that housing prices across the country are recovering and loan guidelines have loosened a bit for conventional loans, FHA insured loans are not as critical to the housing market.
With those two things in mind, the goals of FHA right now are to:
reduce the number of loans they insure
replenish their reserves that were depleted due to all of the foreclosures
concentrate on borrowers that are still underserved
How does this news impact those looking to buy a home? First, realize that a LOT has changed in terms of FHA loans, minimum down payments for conventional loans, minimum credit score requirements for both FHA and conventional loans, etc. In short, if you haven’t spoken with a licensed mortgage originator about the changes, an FHA loan may not even be the best avenue to explore anymore.
Second, expect a rush of buyers into the market this coming year. In the metro Atlanta area, there was a housing shortage for almost all of 2013. Now is the time to plan and get prequalified to get a jump start on the housing market for 2014. If you are buying in the state of Georgia, contact me today to get the prequalification process underway.
Clay Jeffreys is a Mortgage Consultant with Dunwoody Mortgage Services and a writer for “the Mortgage Blog.” If you would like to be a guest writer for "the Mortgage Blog" please contact Clay for details.
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