Are you thinking about refinancing your mortgage? If so, there are several reasons why refinancing…
The Federal Housing Agency (FHA) has just increased the amount of money that can be borrowed through its mortgage programs by more than $64k in most areas. In high cost locations, the increase is even greater. This could mean a big difference in determining which loan option is right for you!
FHA home loans are designed to help those with low to moderate incomes purchase homes. Because these mortgages are backed by the Federal Housing Administration, they allow homebuyers who typically wouldn’t be approved for a conventional loan to receive the financing they need.
The 2022 increases will allow more borrowers to take advantage of FHA’s benefits:
Lower Down Payment
While some conventional loans require you to pay at least 20% down unless you have a high income and credit score, with an FHA loan you can put as little as 3.5% down, allowing you to keep more money in your savings for other expenses.
FHA loans require lower credit scores than traditional loans, making it easier for homebuyers to get approved for the financing they need.
Lower Interest Rates
Buyers with lower credit scores usually face higher interest rates with conventional loans. But with an FHA loan, you’ll likely qualify for interest rates that are much lower than those that you would qualify for otherwise.
Decreased Closing Costs
With an FHA loan, you can put less money down while requesting a home seller pay more toward your closing costs than is allowed with traditional loans.
FHA Loans are Assumable
If you haven’t paid off your FHA loan by the time that you sell your home, the next buyer can assume your loan rather than purchasing a new mortgage at the current interest rate. Often, this allows the new buyer to take advantage of a lower rate, potentially resulting in a quicker sell.
Here are the specifics of the 2022 increases:
- In most areas, the FHA loan limit will be $420,680, an 18% increase over 2021’s limit of $356,362.
- In some lower-cost areas or those with higher costs of construction, limits will vary.
If you have questions about what this change could mean for you, or if an FHA loan is right for you, reach out to one of our Mortgage Consultants today. We’re committed to setting you up for success so you can get approved on a mortgage that’s right for you.
HUNT Mortgage is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government.