Floridian real estate is in heavy demand. Over 500,000 people relocated to the Sunshine State from the start of 2020 to April 2021. Florida’s cost of living and beautiful weather make it an ideal destination.
Florida has many perks, but the recent demand boosted real estate prices. Home loans make homes more accessible to many families. However, these loans have limits that change each year.
Many buyers turn to FHA loans. These loans help buyers who can’t make a big down payment on their property. The FHA issued over 1.3 million home mortgage loans in 2020.
These loans make housing more accessible. Most of them go to first-time home buyers.
Homebuyers with low credit will have an easier time receiving an FHA loan. These loans carry lower requirements than conventional mortgage loans.
However, FHA loans contain loan limits. These limits impact how much money you can borrow.
What goes into FHA Loan Limits 2022? What factors should you consider when reviewing these loans? We’ll explore the details in this article.
Limits Vary Across Counties
Housing types of the cost of local housing influence FHA loan limits. Communities with lower costs of living carry lower FHA loan limits. Counties with higher costs of living give higher loan amounts.
Before budgeting for an FHA loan, check the FHA limits for each county. If your ideal county’s limit is too low, consider a neighboring county. A neighboring county may provide higher FHA loan limits.
The House Type Influences the Loan Limit
Your target house type also plays a role in your FHA loan limit. Buyers can select from a single-family home, duplex, triplex, or quadplex. Each extra unit increases the maximum loan amount.
This structure incentivizes homeowners to select multifamily properties. Not only can you get a higher loan, but you can also collect cash flow from tenants.House hacking is one of the best ways to buy real estate.
Conforming Loan Limits
FHA loan limits revolve around the current year’s conforming loan limit. This limit applies to the size of a mortgage Fannie Mae and Freddie Mac will purchase.
These loan limits change each year. Every November, the Federal Housing Finance Agency convenes to establish next year’s limits.
The baseline conforming loan increased from $510,400 in 2020 to $548,250 in 2021. For 2022, the FHFA set the conforming loan limit at $647,200. This change represents a significant increase compared to the prior year.
A higher conforming loan will raise the FHA loan limit. The limit will still vary across each county. However, a higher conforming loan limit suggests other limits will increase.
The FHA program contains income limits. Any aspiring homebuyer earning more than the income limit cannot qualify for an FHA loan. FHA loans do not come with a minimum income requirement.
The program requires verifiable income and at least two established credit accounts. A car loan and credit card will suffice. Providing pay stubs and online transactions will help with verifying income.
Income limits vary across each county in Florida. Check your county before purchasing a home.
Lenders will also like to see your debt-to-income ratio. This ratio measures your debt in proportion to your income.
Let’s say you make $5,000 per month and pay $1,000 per month in debts. This scenario gives you a debt-to-income ratio of 20%. A lower ratio will help you land better loans for your home in Florida.
Using First-Time Home Buyer Programs
The FHA loan helps first-time homebuyers secure a property. However, this loan is not the only available program for first-time homebuyers.
Florida Housing’s second mortgage programs help borrowers cover down payment and closing costs. Review Florida Housing’s program requirements before pursuing this path.
Applicants will need a credit score of over 640. They will also need to complete educational training.
Improve Your Credit Score Before Receiving a Loan
The FHA loan requires a credit score of 580 or higher if you want to make a 3.5% down payment. For a 10% down payment, your credit score must exceed 500.
A high score opens many opportunities. A higher credit score gives you access to more funds and attractive interest rates. Improving your credit score can save you thousands of dollars on your home.
The credit score consists of the following:
- Payment history (35%)
- Amounts owed (30%)
- Length of credit history (15%)
- New credit (10%)
- Credit mix (10%)
The best way to improve your credit score is to take on debt and pay it off on time. Only incur as much debt as you can afford. Missing any payments will negatively impact your credit score.
Waiting for a Limit Change to FHA Loan Limits 2022
New limits take effect at the start of the year. If you are slightly above a limit, waiting until next year can help.
Conforming loan limits jumped by almost $100,000 from 2021 to 2022. A similar jump in future years will allow more homebuyers to qualify for FHA loans.
If you are within the FHA limits, you can act whenever you desire. If you are itching to live in Florida and are above the limits, you may want to search for other loans.
Finding the Right Lender
The FHA Loan Limits 2022 gave more people access to FHA loans. These loans cater to people with lower credit scores, providing a lower barrier to entry.
The next step is finding a lender that can support your goals. The team at 7th Level Mortgage is here to help.
We specialize in various home loans, including FHA loans, VA loans, USDA loans, and more.Contact us today to see how we can help you live in Florida.
7th Level Mortgage is a leading one-stop mortgage company providing deeply informed, custom-tailored assistance with each mortgage transaction phase. If you are searching for a home loan in New Jersey, Pennsylvania, Delaware, Maryland, New York, or Florida, please contact us today so that we can determine the best Mortgage Lender to place your loan with and get you the best possible rate and program.