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Old 08-09-2012, 12:53 PM
 
38 posts, read 38,297 times
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Default Question about FHA Loan Limits and Down Payment

I'm planning on using an FHA loan to purchase a home. Based on my income, DTI ratio, credit history, and employment history, I qualify for FHA's maximum loan limit in my locale ($330K). The homes that I'm most interested in are listed between $350K and $360K.

So, here's my question: Can I use an FHA loan on a house with a purchase price above the maximum loan limit if I can provide a down payment of between $40K and $50K, which will take the actual mortgage down to around $310K?
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Old 08-09-2012, 01:06 PM
 
Location: Austin
4,153 posts, read 7,213,692 times
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Yes, you can pay cash for the difference, however, why wouldn't you just do a conventional loan? FHA has really high fees right now as they just did another increase. Your fees will be much lower with the conventional loan. Some people are scared of conventional because they think they need to have 20% down, but that's not true. There are tons of lenders doing 5% and 10% down payment programs. You will have mortgage insurance, but a heck of a lot less than the FHA PMI and fees.
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Old 08-09-2012, 01:41 PM
 
38 posts, read 38,297 times
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Quote:
Originally Posted by FalconheadWest View Post
Yes, you can pay cash for the difference, however, why wouldn't you just do a conventional loan? FHA has really high fees right now as they just did another increase. Your fees will be much lower with the conventional loan. Some people are scared of conventional because they think they need to have 20% down, but that's not true. There are tons of lenders doing 5% and 10% down payment programs. You will have mortgage insurance, but a heck of a lot less than the FHA PMI and fees.
Thanks for your feedback. Trust me, I've looked into conventional loans, but private lenders are still scared to death around here (Cleveland area). Most insist on the 20% down payment and require perfect credit. My credit is pretty good (around 700), but apparently not good enough to overcome underwriting review. I have a few friends who encountered similar difficulty in securing conventional mortgages. The market in Cleveland is still really down and banks aren't ready to jump in yet.
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Old 08-09-2012, 06:58 PM
 
Location: Pinal County, Arizona
25,105 posts, read 23,000,716 times
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Quote:
Originally Posted by griffin96 View Post
I'm planning on using an FHA loan to purchase a home. Based on my income, DTI ratio, credit history, and employment history, I qualify for FHA's maximum loan limit in my locale ($330K). The homes that I'm most interested in are listed between $350K and $360K.

So, here's my question: Can I use an FHA loan on a house with a purchase price above the maximum loan limit if I can provide a down payment of between $40K and $50K, which will take the actual mortgage down to around $310K?

FHA does NOT limit the purchase price of a home. It only establishes the maximum loan amount. Say the loan limit is 330,000. The house you are buying is 360,000. You will have to come up with 30,000 - the difference between the Sales price and the Max Loan Amount.
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