Effective January 1, 2014, Maricopa County’s maximum FHA mortgage limit will be reduced from $346,250 to $271,050 for Single Family Residence (SFR) home purchases. This reduction applies to all counties in Arizona with the exception of Coconino, where the FHA loan limit will drop from $450,000 to $362,250.
What does this mean for buyers?
If a buyers offer is under contract and a FHA case number has been assigned by Dec 31, 2013, that buyer will be able to obtain financing up to $346,250. If a buyer goes under contract on or after January 1, 2014, he/she would only be able to finance a maximum of $271,050 with a FHA loan.
What is a FHA loan?
A FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Typically this type of loan is used for first-time home buyers or moderate income home buyers.
Advantages to FHA financing:
- Lower down payment. FHA requires 3.5% of the purchase price as a down payment. If your FICO credit score is below 580, your down payment may be 10%. Conventional/non-FHA loans will require a minimum of 5% -20% of the purchase price.
- Your down payment can also be a gift from a relative, friend or an organization that provides financial assistance. Most conventional mortgages do not allow this, they will require that the down payment come from a borrowers’ savings or other assets, such as proceeds from the sale of another home.
- The typical waiting period to qualify for a FHA mortgage after a short sale or foreclosure is 3 years and 2 years after a bankruptcy.
Disadvantages to FHA financing:
- All borrowers, regardless of the term of their loan or the size of the down payment, must pay the 1.75 percent upfront mortgage insurance premium at closing. This can be added to your loan amount.
- In addition to upfront mortgage insurance, most borrowers will need to pay monthly insurance premiums as well.
If you have questions or need additional assistance navigating the mortgage lending process, I recommend that you contact Shane Hollenback at Academy Mortgage. His contact info is as follows:
Senior Loan Officer
t: (480) 270-4820 | f: (480) 588-0484 |
e: [email protected]
NMLS: 180101 | AZLO-0915409
This entry is cross posted on Phoenix NE Valley: Real Estate, Lifestyle & Living