Great news for home buyers! The FHA Loan Limits increased for 2020
The Federal Housing Administration (FHA) Commissioner Brian D. Montgomery has announced the new FHA loan limits for 2020. The basic conforming loan limit increased from $484,350 to $510,400 for most of the United States.
What is the FHA Loan?
An FHA loan is a mortgage program insured by the Federal Housing Administration. This program allows home buyers to purchase a home with a down payment as low as 3.5% rather than the traditional 20%.
Another benefit of this program is the flexible credit score requirement of 580. It's possible to qualify for this program if your credit score falls between 500-579 but you would have to put a minimum of 10% down instead.
With this loan your down payment can come from sources like your savings, a financial gift from a family member or a grant from down-payment assistance programs.
What does the new FHA Loan Limits for 2020 mean for you?
With the limit increase as mentioned above, you now have more buying power if you want to use the FHA loan to purchase a home. For example, let's say you're approved by us to buy a $495,000 home this year (2019), you would NOT be able to use the FHA Loan program to purchase because that loan amount exceeds the limit.
But if you wanted to buy that same house in 2020, you would then be able to use the FHA loan because limit will be $510,400. As mentioned before the FHA loan is very flexible in terms of down payment and credit score requirements so this new update makes this program even more appealing for first time home buyers.
Some things to consider with the new loan limit updates
The Federal Housing Administration sets the floor and ceiling for this loan program. The limits are set on a county by county basis and sometimes determined by the metropolitan statistical area.
To get the best answer for your county's loan limit, visit this link.
From there, all you have to do is select what state you're in, hit enter and then find the county you are planning to buy in.
If you run into any complications in trying to find out your county's limit, you have one of our mortgage experts at your disposal to help you. We understand everyone's situation is different so if you would like to see if the FHA loan limits for 2020 update can work for you, contact us today!