FHA Lowers Mortgage Limits In Charlotte, NC. Area Starting Janaury 2014

The Federal housing Administration (commonly known as FHA) has announced that they are lowering the mortgage limit amount on FHA loans. Nationally this has a dramatic impact as the overall lowering is said to be as great as $140,000 in some areas of the country. The press releases state that the new FHA loan maximum is $355,350.00. Believe it or not it used to be $500,000. So how does this affect Charlotte, NC. area home buyers and why should we care? Well just because the maximum price is reduced the FHA does it by area and city. Not all cities qualify for the same limit. Each is based on the average price of the area and a formula used by the Federal Housing Administration to formulate the maximum loan amount for that area. In the Charlotte, NC. area currently through December 31, 2013 the maximum loan amount for an FHA loan is $303,750.00. One a lot of people took advantage of with the low interest rates to get away with putting less than 20% down and get a great rate.... I even had some clients go FHA and put 5-7% down just to get the lower rate that was offered versus going 20% with a conventional loan. The payments came out less expensive for them and they felt they could make a better return versus the low interest rates being charged. However; the new changes that affect the housing market and the FHA loans has reduced that amount to $271,050.00 This is a drop of over 10% in the loan amount that FHA will approve. This is a substantial amount for the Charlotte, NC area housing market. If you were looking for example at a $310,000 priced home; then you could buy the house with 3.5% down payment....... However; after the first of the year you will be maxed out on a house at $280,500 to get that 3.5% down payment.... This can make a big different in the house you look at and how you look at homes. How this will affect sellers and buyer is still unknown; but that price point cold see a drop in home sales and buyers who will now have to qualify for a conventional mortgage with 20% down. There are programs out there that will allow you to purchase a conventional mortgage with less than 20% down payment. However; the qualifying criteria is a lot more stringent than FHA and most people might find it more difficult to qualify or not qualify at all….So, if you are considering a home and looking into doing an FHA loan check your area and see what the NEW limit is going to be. You can find the information on their website as well. Here is a link for the FHA site as well. Dave diCecco Realtor/Broker Helen Adams Realty Cell: 704-519-7895 ddicecco@helenadamsrealty.com www.davedicecco.com