This is the time of year the Federal Housing Administration (FHA) announces its new loan limits for the upcoming year, as well as any other changes to FHA loans available through FHA-approved lenders. With the announcement Of 2020 FHA loan limits, many FHA borrowers across the country will reap the benefits of higher loan limits.
Breaking Down the 2020 FHA Loan Limits
According to the FHA’s announcement, eligible FHA borrowers in most parts of the country who secure an FHA loan in 2020 will see larger loan limits to buy a home. For those purchasing a home in a low-cost area in 2020, the new single-family loan limit will be $331,760. This figure has been raised from the 2019 loan limit of $314,827—an increase of nearly $17,000.
For those buying a home in a high-cost area in 2020, there’s more good news: the single-family FHA loan limit will be $765,500, up from $726,525 in 2019. (Loan limits vary by county, so contact your lender to determine your region’s new amounts.) In places where there are higher costs of construction such as Alaska, the FHA loan limit will be $1,148,400. The new loan limits will apply to mortgages with case numbers assigned on or after January 1, 2020 through December 31, 2020.
Implications of the Updated Loan Limits
Overall, the updated loan limits could give eligible FHA borrowers across the country more buying power along with the ability to choose from a wider selection of homes to purchase—including homes in costlier housing markets. These changes also allow FHA borrowers to stay competitive against other potential bidders in the homebuying process. It should also be noted that lenders will still require sufficient income and credit requirements in order to qualify for funding.
Overall Advantages of an FHA Loan
- Wide Variety of FHA Loan Options: Whether it is a 30 year fixed, 15 year fixed or a 203k loan, FHA has you covered.
- FHA Allows Lower Down Payments: With a lower down payment option, more buyers can purchase a new house. This is great for first time homebuyers, and those who have little money to put down.
- FHA Allows 100% Gift Funds: In addition to a lower down payment, those funds can come from a gift.
- FHA Insures Various Types of Properties: These properties include single-family detached homes, 2-4 unit homes, condos, and manufactured homes.
- FHA Streamline Refinance: One of the unique features of an FHA loan is the ability to Streamline Refinance. This is the easiest way to refinance as there is no credit qualifying, no income verification, and no appraisals required if you refinance your FHA loan.
Ready to talk about your home loan needs? A New American Funding Loan Officer is ready to assist you with a variety of home loan options. Let’s find the mortgage that’s right for you!