FHA Home Loans for High-Cost Properties

The Federal Housing Administration, or FHA, insures loans through its diverse programs for borrowers seeking to purchase a new home, renovate a fixer-upper, refinance their current mortgage, or make their current home more green. The flexibility offered by the program combined with its low interest rates and low cash investment makes FHA loan programs one of the easiest for borrowers to be approved for.

These have long been a favorite of first-time buyers and those with low- to middle-incomes.

Is FHA still beneficial if I’m purchasing a more expensive home?

The FHA uses a system of loan limits that vary by county. The average loan limit is $271,050 for a single-family home and $521,250 for a four-family home. But for more high-end real estate markets, such as those found around major cities, the loan limit can reach as high as $729,750 for a single-family home to $1,403,400 for a four-family home. Even for borrowers wishing to purchase a more expensive home, a FHA loan is still one of the most rewarding loan programs available. With a FHA loan, eligible borrowers will find benefits they would rarely receive with a conventional loan such as:

-Competitive interest rates

-A down payment of only 3.5%

-Regulated closing costs

-Lenient debt to income ratios

What are basic FHA loan requirements?

Many borrowers find FHA loans are easier to obtain than conventional loans. They also come with competitive rates. While the FHA insures a portion of each loan, it doesn’t actually issue them. Borrowers will have to meet the conditions and requirements of their lender as well as those set forth by the FHA. In general, the program expects:

-2 years of steady employment without income decreasing

-a minimum credit score of 620

-a clean credit report two years after a foreclosure or after filing for bankruptcy

What other options do I have for financing?

When a borrower wishes to purchase a home for greater than the FHA loan limit in their area, they  have the option to use the FHA loan in conjunction with other financing options.