There has been a lot of buzz leading up to the new year about home buying and, now that 2017 is here, our predictions are looking pretty good. Beginning January, the FHA is loosening some of its limits that are currently restricting consumers from entering the market. Now insuring higher loan limits with lower down payments and greater flexibility, the FHA is providing much more borrowing power and 2017 looks to be the year for all those renters hoping to buy a home.
Both FHA and Conforming loan balances are now higher in nearly every county across the nation, signaling a healthy and growing economy and making homeownership much more attainable. Some of these changes include:
– Debt-to-income ratios as high as 55%
– Credit scores as low as 580 for loans up to $424,100 and as lows as 640 for loans exceeding this amount
– 3-year waiting period on previous short sale
– 3-year waiting period on previous foreclosure
– 2-year waiting period for Chapter 7 bankruptcy
– Allows a borrower to refinance a second mortgage with LTV (loan-to-value) up to 95.6%
For buyers in Southern California, meeting the down payment requirement has been a great barrier to entry. However, with these new FHA limits in effect, this could be a very favorable vehicle to help consumers fulfill their home-buying dreams.