$729,750 is the New Maximum Loan for FHA, Fannie and Freddie!
On 3/6/08 FHA, Fannie Mae, and Freddie Mac announced that they have raised loan limits set by the economic stimulus bill.
FNMA and FHLMC will only purchase jumbo-conforming mortgages that are originated through December 31, 2008, and that are secured by one-unit properties. Mortgage lenders will assist customers with implementation by providing reference materials including an online loan limit reference tool and guidance on our loan limits based on a property's geography, both of which are available as of this writing in mid March.
Prior to the change, FHA was capped at $362,790 and Fannie and Freddie had loan ceilings of $417,000. Before the credit crunch, rates on jumbo loans were about .25 percent higher. Now with tighter credit, jumbo rates are as much as a 1% higher.
The FHA plan will open up some great opportunities. Here are some of the highlights:
*FHA loans can allow a credit score as low as 620
*The borrower has to put in 3% of the sales price into the transaction.
*All 3% can come from a gift if necessary.
*You need no cash reserves.
*Qualification ratios can go as high as 50% for debt to income ratio.
*The seller can pay up to 6% of the sales price toward closing costs; however the borrower still MUST put 3% into the transaction.
*All single family homes and townhouses are eligible for FHA financing. Condos must be approved for FHA.
*FHA does not have an issue with declining markets (Fannie Mae and Freddie Mac do)
*This will really help with first time buyers, or buyers who have slightly below average credit and little cash.
*FHA mortgages are consumer friendly loans made by private banks that are insured by the government, making them attractive because the government guarantee enables lenders to easily sell off the loans.