High-Balance FHA Home Loans In High-Cost U.S. Counties for 2023 is also called FHA Jumbo loans and is now at $1,089,300. High-balance FHA loans or Jumbo FHA loans are FHA loans with higher FHA loan limits than the traditional FHA loan limit of $472,030 in high-cost areas. HUD just increased FHA loan limits for 2023 to $472,030 from $480,680.
HUD, the parent of FHA, has increase the high-balance FHA home loans in high-cost areas to $1,089,300 due to skyrocketing home prices. California has more high-cost areas than any other state in the nation.Â
This increase was the seventh increase in a row. Without the increase in the FHA loan limit, many homebuyers would be priced out of the booming housing market. FHA Jumbo Loans have the same HUD agency mortgage guidelines as standard FHA loans. The only exception on FHA Jumbo Loans are higher rates due to being a jumbo loan. But all credit, credit score, and debt-to-income ratio standards are exactly the same. In the following sections, we will cover what high-balance FHA home loans in high-cost counties are and how they work.
California Home Prices Continue To Climb After Coronavirus Recovery
Despite the coronavirus outbreak, demand for homes remains stronger than ever with no sign of any slowdown. There is more demand for homes than an inventory of housing. This is sparking an increase in home prices. More and more renters are taking action in getting qualified for a mortgage so they can start shopping for a home. Renters are taking advantage of the historic low mortgage rates.
FHA jumbo loans make home ownership possible in high-cost areas like many counties in California. Traditional jumbo loans require a 20% down payment. With FHA loans, homebuyers can qualify for 3.5% down payment home purchase FHA Jumbo Loans with 580 credit score.
There are no doubt rates will be increasing due to the skyrocketing inflation rate. Thousands of renters are leaving the city to the suburbs and/or rural areas with a yard and more space due to high crime, BLM protests, and companies offering workers remote job positions. Many feel if they do not buy a home now, they will lose the opportunity of becoming a homeowner in the months and years to come. The housing market is forecasted to be strong for the next few years to come.Â
High-Cost Counties In The United States
Many counties on the East and West Coasts have significantly higher-priced homes than the rest of the country. There are certain counties in the U.S. where home prices are higher. For example, many counties in California have higher median home prices and are considered high-cost areas.
Homebuyers in high-cost areas are eligible to qualify for FHA and conforming high-balance mortgage loans. Any loan higher than the FHA or conforming loan limit up to the ceiling of $1,089,300 on single-family homes are classified as high-balance mortgage loans.
In high-cost areas, the FHA loan limits are higher than the traditional 2023 FHA loan limit of $472,030. For example, in zip code 90210 in Los Angeles County, California, the maximum FHA loan limit is $1,089,300 on single-family homes. California has one of the highest home prices in the nation.
California Leads The Nation With The Highest Home Prices
Companies, businesses, and individuals have taken a devastating economic downturn due to the coronavirus outbreak and the shutdown in the state. However, the housing market in California remains strong after the coronavirus recovery with home prices skyrocketing at historic highs. Home prices have been increasing year after year.
Many homebuyers have been priced out of the housing market in California. However, with an increase of FHA high-balance loan limit in high-cost counties in California, it opens doors to many homebuyers who got priced out of the housing market. California still holds the record of having the highest home prices in the nation on single-family homes.
Due to rising home prices and the booming housing market, HUD, the parent of FHA and the Federal Housing Finance Agency (FHFA), has been increasing FHA and conforming loan limits for the past six years. Many areas in the United States have higher home prices than others. Those areas are called high-cost areas. Both conforming and FHA loan limits are higher in high-cost areas. In this article, we will discuss and cover High-Balance FHA Home Loans In High-Cost U.S. Counties for 2023.
Buying Homes In High-Cost Counties Using FHA Jumbo Loans
High-Balance FHA Home Loans has the same agency mortgage lending guidelines as standard FHA loans. Lenders do consider high-balance FHA home loans riskier than traditional FHA loans. High risk by lenders means loan level pricing adjustments (LLPA) which are pricing hits. High-balance FHA loans have higher mortgage rates. Borrowers with lower credit scores may have to pay discount points on high-balance FHA jumbo loans.
Maximum Loan Limit On High-Balance FHA jumbo Loans In High-Cost Areas For 2023
FHA loan limit for 2023 in traditional counties in the nation is now at $472,030 for single-family homes. The ceiling cap on Jumbo FHA loans in high-cost areas for single-family homes in 2023 is $1,089,300. Mortgage lenders consider High-balance FHA Jumbo loans higher risk versus traditional loans.
FHA Bad Credit Lenders has no overlays on FHA Jumbo loans unlike other lenders. Other lenders may require a higher credit score or lower debt-to-income ratios. However, FHA Bad Credit Lenders has zero overlays on High-Balance FHA Loans.
Lenders consider FHA jumbo loans riskier than standard FHA loans is because in the event the borrower defaults and the property goes into foreclosure, it may take months if not years to sell higher-priced homes. It is much more difficult to liquidate higher-priced homes than average-priced homes in the event of foreclosure. Mortgage lenders are not in the real estate investment business. They do not want to have real estate in inventory.
Home Prices In Traditional Areas With Median Prices Versus Prices in High-Cost Areas
The average home price in the United States is $480,000. Many counties in California are considered high-cost areas. The average home price in California is $780,000. That is almost double the price of an average home in other traditional areas.
The main different between traditional standard FHA loans versus FHA jumbo loans is FHA jumbo loans have higher rates and are subject to pricing hits more so than standards FHA loans. This is because there are more risk for lenders on higher priced homes in the even the homeowner forecloses.
It is easy to sell a $480,000 home than it would be to sell a $1,000,000 high-end home in a high-cost area. Due to liquidity and risk issues, most lenders will have lender overlays on FHA high-balance loans. Mortgage rates are higher on high-balance FHA home loans than traditional FHA loans due to layered risks. FHA Bad Credit Lenders is one of the very few lenders with no lender overlays on high-balance FHA mortgages.
What Are High-Balance FHA and Conventional Loans In High-Cost Counties?
FHA and Conventional Loans have high-balance loans in specific counties with higher home prices. HUD has set higher loan limits in counties where home prices are above the national average. HUD has been increasing FHA loan limits throughout the country every year so homebuyers are not priced out of the housing market.
As the standard FHA loan limit increases every year on standard FHA loans in low-cost areas, FHA loan limits in high-cost areas follow the increase and goes up as well. HUD, has been increasing loan limits on FHA jumbo loans for the past seven years to keep up with market housing prices.
Any FHA loan higher than the standard FHA loan limit of $472,030 is considered a high-balance FHA loans or FHA jumbo loans. For example, the FHA loan limit in zip code 90210 (Los Angeles County, California) is $1,089,300 versus the standard $472,030 in areas with median home prices.
High-Balance Conforming Loans In High-Cost Areas For 2023
Any Conventional loan higher than the standard Conforming Loan Limit of $726,200 is called a high-balance conventional loan. For example, the Conforming loan limit in zip code 90210 (Los Angeles, California) is $1,089,300 for single-family homes versus the standard $726,200.
The best benefit of Conforming and FHA jumbo loans, you do not have to come up with a 20% down payment like you have to with traditional jumbo mortgage loans. The minimum agency down payment guidelines applies. For FHA jumbo loans, the minimum down payment requirements are 3.5% with a 580 minimum credit score. For conforming jumbo loans, you need a 620 credit scores and the down payment requirements is 3% for first-time homebuyers and 5% down payment for homebuyers who owned a home in the past three years.
HUD, the parent of FHA sets the FHA loan limits and agency mortgage guidelines. The Federal Housing Finance Agency (FHFA) is the federal agency that sets the guidelines for Fannie Mae and Freddie Mac for conventional loans.
FHA Versus Conventional Loans
Many times, borrowers need to go with conventional versus FHA loans due to the higher conforming loan limits. Conventional loan limits are capped at $726,200 in traditional areas. FHA loan limits are capped at $472,030 in traditional areas. However, in many high-cost counties in the U.S., both FHA and Conventional loans are way up there.
FHA jumbo loans is any loan limit between the floor of $472,030 and the ceiling cap of $1,089,300 on FHA loans. Conforming jumbo loans are the minimum floor of $726,200 up to the ceiling cap of $1,089,300. FHA jumbo loans are easier to qualify than conventional jumbo loans.
For example, in Los Angeles County, California where the zip code is 90210, both the high-balance FHA and Conforming loan limits are the same at $1,089,300,. Loan limits on both FHA and Conventional loans are higher on two to four-unit homes. This holds true in both traditional and high-cost areas. Many borrowers opt for FHA versus Conventional loans due to the lenient mortgage guidelines.
Mortgage Guidelines On High-Balance FHA Jumbo Loans
HUD high-balance mortgage agency guidelines are the same as traditional FHA loans. There are no additional lending requirements on FHA Jumbo Loans versus traditional FHA loans with $472,030 loan limits with the exception of pricing hits based on credit scores. Most mortgage companies will have lender overlays on High-Balance Jumbo Loans.
High-balance FHA jumbo loans has the same minimum agency guidelines as standard FHA loans in low-cost areas. HUD Minimum Agency Guidelines on high-balance FHA jumbo loans still require a 580 credit score for a 3.5% down payment home purchase FHA loan. The minimum credit score requirements to qualify for a 3.5% down payment high-balance FHA jumbo loans is 580 FICO. Borrowers with under 580 FICO can qualify for FHA Jumbo Loans
FHA Jumbo Loans With Low Credit Scores
Borrowers with credit scores between 500 to 579 FICO need to put a 10% down payment per HUD Mortgage Guidelines. Mortgage borrowers need to get an approve/eligible per automated underwriting system. Borrowers with refer/eligible per AUS findings can qualify for an FHA Jumbo loan with manual underwriting.
FHA Bad Credit Lenders can get homebuyers approved for FHA jumbo loans with credit scores down to 500 FICO. However, you may get priced a higher rates on FHA jumbo loans with low credit scores.
Lenders may request two appraisals in areas where the housing market is declining due to risks involved with higher-priced homes. Mortgage lenders may require higher lending requirements on High-Balance FHA jumbo loans called lender overlays. The great news is FHA Bad Credit Lenders has no lender overlays on high-balance FHA jumbo loans. There are pricing hits on high-balance FHA loans due to lower credit scores. Reserves depend on what the automated underwriting system findings are.
High-Balance FHA Home Loans After Bankruptcy And Foreclosure
High-Balance FHA Home Loans after bankruptcy and foreclosure are the same as traditional FHA loans. We will go over the High-Balance FHA Home Loans after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. There is a two year waiting period after Chapter 7 Bankruptcy.
There is no waiting period after Chapter 13 Bankruptcy discharge date to qualify for FHA jumbo loans. Most lenders may require a one or two year waiting period after Chapter 13 Bankruptcy discharge, but FHA Bad Credit Lenders does not require a waiting period requirement.
Homebuyers can qualify for high-balance FHA jumbo loans during the Chapter 13 Bankruptcy repayment period without the Chapter 13 being discharged one year into the repayment period with Trustee approval and manual underwriting. 12 timely payments to the bankruptcy trustee need to be made. There is no waiting period after the Chapter 13 Bankruptcy discharged date to qualify for high-balance FHA home loans.
Can I Get Mortgage After Chapter 13 Bankruptcy Discharge?
Any Chapter 13 Bankruptcy that has not been discharged for at least 24 months need to be manually underwritten. FHA manual underwriting guidelines apply. There is a three-year waiting period after a foreclosure, a deed in lieu of foreclosure, a short-sale to qualify for a high-balance FHA mortgage. No late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, a short sale in order to get an approve/eligible per automated underwriting system. One of two late payments after bankruptcy and/or a housing event is not always a deal killer.
Agency Guidelines On FHA Jumbo Loans Versus Lender Overlays
Most lenders will have lender overlays on Jumbo FHA loans. Lender overlays are additional mortgage guidelines that are above and beyond the minimum HUD agency mortgage guidelines.
Many lenders may require you a higher credit score, lower debt-to-income ratio, or collections paid off on FHA jumbo loans. This is not a requirement of HUD. If you are asked for higher lending requirements on FHA jumbo loans versus standard FHA loans, contact us at FHA Bad Credit Lenders at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com.
Many lenders may require a 680 credit score on high-balance FHA loans when the minimum credit score requirement by HUD is 580 FICO. Other times, lenders may require a lower debt to income ratio such as 40% to 45% when HUD allows DTI to be at 46.9% front end and 56.9%Â back end to get an approve/eligible per AUS. Lenders can set any lender overlays they want.
Getting Approved With Best FHA Bad Credit Lenders With No Overlays
The great news is FHA Bad Credit Lenders has no lender overlays on high-balance FHA loans. We just go off the AUS findings and have no other lender overlays. Since high-balance FHA home loans are considered riskier loans, lenders are very cautious when it comes to approving them.
Over 80% of our clients at FHA Bad Credit Lenders are homebuyers who could not qualify for an FHA loan at other lenders due to overlays by the mortgage company or due to stress during the mortgage process. FHA Bad Credit Mortgage Brokers are able to do mortgage loans other lenders cannot do.
If you are looking to get qualified for a high-balance FHA loan with a lender with no lender overlays or find out whether or not a specific area is a high-cost area, please contact us at FHA Bad Credit Lenders at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at FHA Bad Credit Lenders is available 7 days a week, evenings, weekends, and holidays.
