| One of the official duties of the new president was to | | | | to value in the high cost markets to ensure a sale. This |
| ensure the FHA loan limits would change. With the fall | | | | 125 percent loan to value is good for 2009, after which |
| of Fannie Mae and Freddie Mac it has been essential | | | | time the current market will be reassessed. Home |
| to try and re-stimulate the economy. The stimulus bill | | | | buyers looking for an FHA loan will need to speak with |
| has allowed for Fannie Mae and Freddie Mac to | | | | the available lenders in their area to determine the loan |
| guarantee loans at new limits. It has also changed how | | | | limit they will be awarded. The loan limit will then help |
| the FHA loan program works. Three things have | | | | the buyer find a home in their price range. |
| recently changed regarding the FHA loan limits. The | | | | Added to the monetary limits which have changed on |
| first is the loan amount which can be awarded to the | | | | FHA loans are the FICO score changes. Prior to 2009 |
| borrower. The second change is to the FICO score, | | | | a borrower needed 580 for their FICO score. In April |
| and lastly the down payment has been modified. | | | | 2009 this changed to 620. The lenders negotiated with |
| In 73 counties the Federal Housing Administration is | | | | FHA to increase the score due to the risk they felt |
| allowing for mortgages of $729,000. There are also | | | | 580 posed. |
| loans awarded for more than $271,050 in more than | | | | The next option FHA modified was the down |
| 600 counties around the United States. The new limits | | | | payment required. To obtain an FHA loan one needs |
| are being assessed state by state. While the limits | | | | to have at least a 5 percent down payment. Before |
| mentioned here are the new limits, depending on the | | | | 2009 the down payment required was 3 percent. The |
| state you live in you might not find much has changed. | | | | change is not too difficult given the various grant |
| The new limit change occurred to help families in a high | | | | programs available. The down payment requirement is |
| cost housing market. The higher cost housing market | | | | different than the 125 percent loan to value we spoke |
| has been suffering because no one can afford the | | | | of above. The 125 loan to value is only available in |
| homes being sold under regular private mortgages. | | | | certain areas, and within special circumstances. For a |
| The government and FHA felt the limits needed to be | | | | normal FHA loan 5 percent of the purchase price is |
| raised in order to get the economy back on track via | | | | needed. This provides a 95 percent loan to value for |
| these high cost markets. Among the changes to the | | | | an FHA loan. Borrowers need to understand the FHA |
| limit totals is the loan to value. FHA loans through | | | | loan limits as well as the qualifications regarding the |
| Freddie Mac and Fannie Mae can be 125 percent loan | | | | loans in order to apply successfully for the mortgage. |