FHA Lower Mortgage Loans Effective October 1, 2011

FHA sets the maximum loan amount allowed to be able to obtain FHA financing. These loan limits vary by counties. For example, the current maximum loan limit in Polk and Marion Counties is $295,000.

Effective 10-01-11, the maximum loan limits will change and the expectation is that they will decrease. How does this effect you as a home buyer?

FHA loans require a small down payment of 3.5% of the sales price. Many home buyers prefer this loan program since there is less money out of their pocket than if they financed with a Conventional loan, which has a minimum down payment of 5% of the sales price.

Currently, if you are buying a home of $305,700 or less, you will be able to obtain the maximum loan amount of $295,000 (in Polk and Marion Counties) with your 3.5% down payment.

FOR EXAMPLE PURPOSES ONLY, if FHA lowers their maximum loan limit to $275,000 in Polk and Marion Counties, your maximum sales price (in order to keep your down payment at 3.5% of the sales price) is now $285,000.

This will eliminate the FHA loan program for buyers who want to put a minimum of 3.5% down and are buying a home for more than $285,000.

If you are thinking about buying in the sales price range of $300,000 +/- and you want a maximum FHA loan, you will want to get a home purchase under contract and start your loan process as soon as possible.