FHA adjusts their loan limits on a yearly basis. Home buyers must be aware of what these limits are and when they might fluctuate. Below is some useful information on MA FHA loan limits for this year.
An Explanation of FHA Loan Limits
Loan limits reflect highest loan amounts qualifying for an FHA loan. The loan amount is less than the purchase price. For example, if you purchase a house for $ 300,000.00
and are submitting 3.5% down, then the loan amount is $ 289,500.00
How FHA Loan Limits are Calculated
FHA loan limits range by location. Median real estate sale prices are analyzed against limits for national conforming loans. Conforming loans meet Fannie Mae and Freddie Mac guidelines and may be sold to secondary mortgage markets. FHA takes 65 percent of the limit for conforming loans as the mark for their bottom limit for low end areas. Low end areas are cities where 115% of the median real estate sales price is lower than 65% of the conforming limit. For higher priced communities, the limit can reach 150% of national conforming loan limit. These areas are those where 115 percent of the median real estate values exceed 150% of limits for national conforming loans.
MA FHA Loan Limits For This Year
The loan range is $271,050 and $625,500. Thus, in no case will it fall less than $271,500 or go above $625,500. This floor and ceiling matches 2014 figures, but many cities are not at this min or max and will notice a change for this year. Additionally, there are different limits for different property types. You may find exact figures at https://entp.hud.gov/idapp/html/hicostlook.cfm.
Why Is It Important to Understand MA FHA Loan Limits For This Year
It is necessary to know the max purchase price throughout the buying process. Selecting a property beyond the limit may result in a larger down payment or require you to switch to another loan program. For instance, if the loan limit is $ 300,000.00
and you can only submit a 3.5 percent down payment, then your price limit is $ 310,880.83
. Purchasing a home for $ 317,098.45
will result in another $5,648 in up-front costs to make up the difference. If you do not have the extra money, this can stop the purchase from completing successfully. Remember that the max price limit might not be the same for each town that you are looking in. It is a good idea to know this before negotiating an offer.