FHA Loan Cap Rates Lower for the Outer Banks in 2014

down arrowWhat goes up, must come down. Who thought this would apply to FHA loan caps?

Beginning right at the stroke of mid-night of 2014, the current FHA loan cap of $729,750 will be reduced to $625,500 in high-cost areas. FHA will keep its current loan limits in place in areas where housing costs are lower than $271,050. The change will affect 650 counties nation-wide according to the Department of Housing and Urban Development (HUD).

According to the National Association of Realtors, “FHA insures loans for buyers with down payments as low as 3.5 percent. The agency raised its limits during the financial crisis to help more home buyers, and the program quadrupled as a result. However, it faced mounting defaults and losses. 

‘As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play,’ says FHA Commissioner Carol Galante. ‘Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved.’”

Just what IS an FHA loan?

The Federal Housing Administration insures the FHA loan against the owners defaulting on the loan. In other words, if you walk away from your home and mortgage, FHA will pay the lenders. This guarantee allows lenders to make large mortgage loans.

Who can get an FHA loan?

There are no income limits, but there are limits to how much you can borrow and the amount of mortgage loans are relative to your area home prices. To see what your area qualifies for, check out HUD’s website.

Qualifying is easier than some loan qualifications. You need to have “reasonable” debt to income ratio usually better than 29/41, however 55% is not unheard of. Additionally, you will need to have decent credit, not pristine, but decent.

Are FHA loans worth applying for?

Down payments may be as low as 3.5%, whereas many other loans don’t allow for that low of a down payment.

Other benefits to using an FHA loan are:

-Gifting for down payments and closing costs are more acceptable.

-There is no prepayment penalty for paying your loan off before it’s due – in other words, you can pay it off early without them slapping you with a huge penalty for being fortunate enough to be able to pay it off.

-FHA lends tend to be a bit more lenient should you fall on financial hard-times.

-FHA allows funding for home improvements using your FHA 203k programs.

Click HERE  for Outer Banks 2013 Loan Caps


Outer Banks 2014 Loan Caps Changes

County One Family Two Family Three Family Four Family Median Sale Price
CURRITUCK $458,850 $587,400 $710,050 $882,400 $307,000
DARE $391,000 $500,550 $605,050 $751,900 $273,000

Perhaps the home you are looking for doesn’t qualify for an FHA loan whether it’s now out of the allowed price range or the condition doesn’t warrant qualification. Generally, if you have good credit, there are many other options for you.

To find out what your financing options are, contact me today. I’ll be able to find the financing that will fit your needs. If you’re wondering if you can find a home to buy on the Outer Banks, I can help you with that, too. Selling? I’m here to help you every step of the way. In today’s market, you need a professional!

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