New Limits on FHA Loans

We are just a couple weeks away from new limits on FHA loans.

FHA is decreasing their loan insurance limits on January 1st, 2014 from $417,000 to a little over $362,000. That’s nearly a $55,000 dollar difference.

This change will greatly decrease the overall purchasing power of buyers who only qualify for FHA financing. FHA has less stringent credit requirements than many other loan programs. Also, FHA allows individuals who have claimed bankruptcy to qualify for home loan after two or three years. Conventional loan programs may require anywhere from four to seven years for the individual to qualify for a home loan.

Why is the FHA lowering the loan limits? As the housing market continues to recover, they are attempting to reduce their role as private capital is returning to the market. Also, since September, FHA needs to draw 1.7B dollars to cover their losses on bad loans.

Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to real estate advice from Portland’s Real Estate Advisor, Rick Sadle.

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