San Jose, CA FHA Mortgage Limits 2016

sebfreyMortgage, Silicon Valley Real Estate

FHA HUD Logo

The Federal Housing Administration (FHA) reviews their mortgage limits on an annual basis. If you’re buying a home in 2016 and intend to use a FHA mortgage, it’s useful to be aware of what they are and when they can change. For 2016, in many regions, the limits have risen to reflect the improving market. Many home owners who are interested in refinancing this year to take advantage of today’s low rates will want to at least check into a FHA loan, as for many borrowers, it’s the perfect loan product. Understanding FHA Mortgage Limits Mortgage limits reflect the most that can be borrowed on a FHA mortgage. The mortgage amount is lower than the purchase price. For example, if you buy a property for $ 575,000.00 and you have a down payment of 3.5 percent , then your mortgage amount will be $ 554,875. How Are FHA Mortgage Limits Calculated FHA mortgage limits vary by county and city. Median home sale prices are analyzed against the national conforming mortgage limits. Conforming mortgages are those that comply with the Freddie Mac and Fannie Mae guidelines and may be sold to the secondary mortgage market. FHA calculates 65% of the limit for conforming mortgages to set their floor for low cost markets. Low cost markets are towns where 115% of the median home price is lower than 65% of the conforming limit. For high end markets, the limit goes as high as 150% of the national conforming mortgage limit. High cost areas are those where 115% of the median real estate … Read More

Santa Cruz Fixer Uppers and the FHA 203K/Energy Efficient Mortgage

Seb FreySanta Cruz Real Estate

But I digress. 🙂 fixer.jpg Rick had come to my office so we could discuss the FHA Energy Efficient Mortgage program, and how it can be combined with the FHA 203K program to do some renovation work on older, fixer-upper type properties (there’s also, apparently a streamlined FHA 203K which may be easier to deal with). There are lots and lots of older properties for sale these days at really cheap prices (especially in Watsonville , but also in the San Lorenzo Valley , and increasingly in the mid-county areas like Live Oak, Soquel , Capitola , etc.). … However, if you are wiling to jump through the hoops, this will get you a house with improved energy efficiency, and the borrower will get an additional 2.0% less debt ratio with the energy savings – in other words, it will in theory allow you to qualify to buy a more expensive home. … If you’re looking to buy an affordable house in Santa Cruz county, but don’t want to feel like you are living in a shack, these programs are definitely worth checking into.

More about Santa Cruz and the 2008 Housing Bill

Seb FreySanta Cruz Real Estate

Here’s a bit of a run-down on some of the acronyms used in my last post: A GSE is a Government Sponsored Enterprise – in this case, Fannie Mae and Freddie Mac, but there are and have been a few others. … It’s no surprise that a major piece of the legislation that President Bush just signed addresses the FHA – together with Fannie Mae and Freddie Mac, these institutions are pretty much the only things holding the real estate market together at the moment. … It used to be that we didn’t have too many VA loans in the area, but now prices have dropped in many parts of Santa Cruz and north Monterey County that VA loans are becoming increasingly more frequent.

…Don’t get me wrong – I love commie-pinko agitators as much as the next guy, but you can see from the article that the author very much favors competing legislation, H.R. 6116, the Saving Family Homes Act of 2008 .

Santa Cruz and the Housing and Economic Recovery Act of 2008

Seb FreySanta Cruz Real Estate

The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008). FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program . … The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008). … Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members.

FHA Loans come to Santa Cruz

Seb FreySanta Cruz Real Estate

FHA HUD Logo

There’s a little space on the California Residential Purchase Agreement form under the “financing” section to specify whether or not you’re using an FHA loan, but until recently, I had never seen that box checked. … Many parts of Santa Cruz county have been declared as declining markets by many lenders, and those lenders are requiring stiffer down payment requirements, which serve to put this less-expensive real estate out of the hands of would-be buyers. … The California Residential Purchase Agreement has a space in the FHA financing paragraph to mark enter how much the seller will have to pay for required FHA repairs – this is given as an amount “not to exceed.” … Time for the proverbial bottom line: if you don’t have a lot of cash for a down payment, and you’re buying a pretty solid home that likely meets FHA appraisal standards, and you think you can get the seller to pay your FHA mortgage insurance – an FHA loan may make sense for you.

Santa Cruz Gets Highest FHA Loan Limit – $729,750

Seb FreySanta Cruz Real Estate

Counties that get the $729,750 maximum for FHA loans are likely to get that same level for Fannie and Freddie mortgages, experts said.

… In California, the counties at the maximum level for FHA loans are Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Benito, San Francisco, San Mateo, Santa Barbara, Santa Clara, Santa Cruz and Ventura. At the other end, Lassen, Modoc and Trinity counties are subject to a loan cap of $271,050 — a standard amount in an area with normal home prices.

…Oh, and if you do know anyone who was waiting to buy a house once the Guv’mint got its at together and raised the conforming loan limits – won’t you send ’em my way?