FHA updates their loan limits on an annual basis. Home buyers must know what they are and how they might fluctuate. Below is an update on updated limits for FHA loans in MA.
Understanding FHA Loan Limits
Loan limits are the highest allowed loan values for an FHA loan. The loan value is less than the purchase price. For instance, if you buy a house for $ 300,000.00
and are paying a 3.5% down payment, then the loan value will be $ 289,500.00
.
How FHA Loan Limits are Determined
FHA loan limits vary by state and city. Median home values are measured against national conforming loan limits. Conforming loans must fall within Fannie Mae and Freddie Mac rules and can be sold to the secondary mortgage market. FHA takes 65 percent of the limit for conforming loans as their floor in low cost markets. Low cost markets are ones where 115% of the median home sales price is lower than 65% of the conforming limit. For high end regions, the limit goes as high as 150% of limits for national conforming loans. High cost areas are those where 115 percent of the median real estate price exceeds 150% of the national conforming loan limits.
Updated Limits For FHA Loans In MA
The loan range is between $271,050 and $625,500. So, in no community will the limit be under $271,500 or go above $625,500. Both the low and high limits remain the same as the previous year, but most cities are in between and will thus have a difference for 2015. Adjustments are made based on property type as well. Specific numbers can be found at https://entp.hud.gov/idapp/html/hicostlook.cfm.
Importance of Updated Limits For FHA Loans In MA
It is necessary to know your max purchase price during your property search. Purchasing a house above the limit will require a larger down payment or require you to change to another type of loan. For example, if the loan limit is $ 300,000.00
and you have 3.5% down, then your price limit is $ 310,880.83
. Buying a property for $ 317,098.45
results in a $ 6,217.62
gap. The buyer would need to provide this money. If you are a cash sensitive home buyer, this can be detrimental. Do not forget that the max home price may not be identical for each town that you are looking in. It is helpful to know this while you are looking for a house.
