As announced on December 6, 2014 in the FHA Mortgagee Letter 2013-43, FHA loan limits in Orange County will be lower in 2014 versus 2013. Other California counties will be effected by the loan limit drop as well, including Los Angeles, Riverside, San Bernardino, and San Diego. According to FHA, "due to the expiration of the authority granted in the Consolidated and Further Continuing Appropriations Act of 2012, the calculation of FHA's single family loan limits is altered, resulting in a decrease in the calculation of high cost limits and the loan limit ceiling for case numbers assigned on or after January 1, 2014 through December 31, 2014. "
How this Effects Orange County, CA
The 2013 FHA loan limit for Orange County is/was $729,750. The new limit for 2014 will be $625,500, matching up with the standard high balance Conforming loan limit for Fannie Mae and Freddie Mac loans. The FHA program has been great for FHA Orange County home buyers for several reasons. It serves several "niches". One of those niches was the higher loan balance allowed with only 3.5% down payment. It has been fairly difficult for home buyers who have less than 20% down payment to buy a home in Orange County with less than 20% down, let alone less than 10% down payment. Especially when the purchase price results in a "high balance" loan, or loan amount over $417,000. So while the FHA loan program may have high mortgage insurance rates, it still has been an important loan program for Orange County partially because of the high loan limits, along with low down payment requirements, flexible FICO score requirements, high debt to income ratio limits, and flexibility when it comes to prior bankrupty or foreclosure.
The FHA Program will Still Be Important in Orange County
FHA will still be an important loan option, even with the loan limit dropping to $625,500. It is still a very flexible loan program when it comes to qualifying for home loan. In the OC, a home buyer can still buy a home for $648,000 with only 3.5% down payment using an FHA loan. The only program better than that is the VA home loan program, but you'll need to be a Veteran to qualify.
The first step in the Orange County home buying process is to consult with an Orange County loan officer who can prepare custom FHA loan scenarios, along with a Side by Side Analysis showing the buyer the best options based on their qualifications.
Authored by Tim Storm, an Orange County, CA Mortgage Loan Officer MLO 223456 - Please contact my office at the Home Point Financial. Direct line at 949-640-3102. www.OrangeCountyVALoans.com