FHA tends to have marginally lower rates than conventional loans too

FHA tends to have marginally lower rates than conventional loans too

The Federal Housing Finance Agency (FHFA) recently announced that the maximum loan limits on Fannie Mae, Freddie Mac, and FHA mortgages are increasing in 2018

The FHA requires a 3.5% down payment. The FHA program remains the most popular loan program for first time home buyers due in part to its lower down payment requirement, and in part due to its leniency with credit issue. The pris (compared to a 5% down Fannie/Freddie loan) are that the FHA requires a non-trivial up front fee that is rolled into the loan and the monthly PMI on an FHA loan lasts all 30 years rather than dropping off when you get to 20% equity as with Fannie/Freddie loans.

For borrowers who want to do zero down payment the options become more limited and more costly. The USDA and VA programs allow for no money down but both come with restrictions and caveats that exclude a large portion of borrowers (see here for more on that). You’ll often see advertisements from lenders for no money down programs but these “down payment assistance programs” programs are usually just FHA loans with assistance with the 3.5% down and they invariably come at a cost – usually in the form of much higher interest rates and higher fees. The problem with that is they can cost you much more in the long term.

For borrowers struggling to come up with a down payment, and who are not good candidates for the USDA or VA mortgage programs, the best bet is normally to figure out a way to come up with at least 3.5% down on their own – either through their own savings or from family member help. By coming up with 3.5% to 5% down on your own you get the benefits of an FHA or Fannie/Freddie loan without having the burdensome extra costs and significantly higher interest rates that are associated with these so-called “grant programs” or other down payment assistance.

Starting this month the loan limits on Fannie and Freddie loans increased to $453,100 for single family homes in every county in America, and in counties designated as “high cost” the loan limit is $679,650. This increase helps adjust for inflation and the rising costs of homes throughout the country. See the Fannie Mae announcement here.

Whereas the previous loan limit in non “higher cost” counties was close to $271,000 before, the new limit in those counties is $294,515. And in many counties the loan limits are higher based on cost of living. See here to check current FHA and Fannie/Freddie loan limits by county.

This all means it will be easier to get government-backed loans in counties where housing prices have risen. Contact us to learn more about qualifying.

The FHA also announced an increase in loan limits across the country

Several weeks ago the Federal Housing Finance Agency (FHFA) announced that the HARP program would be extended through the end of 2018. In addition, a new program designed to allow borrowers to refinance even if they have little to no equity in their home was announced. This new program looks as if it will function as a successor to the HARP program in the years to come. See more details below and contact us today for more information or an estimate on a government-backed mortgage.

The Federal Housing Finance Agency (FHFA) has announced that the Home Affordable Refinance Program® (HARP®) will be extended to , continuing to provide liquidity to support eligible borrowers.

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In addition, Fannie Mae and Freddie Mac will introduce new high loan-to-value (LTV) ratio same-investor refinance options for loans with note dates on or after , with a 15-month seasoning requirement.

Under the new option, as with HARP, the refinance must provide a borrower benefit, such as a lower interest rate. Unlike HARP, the new option will not have an expiration date.

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