The 2011 FHA loan limits in Orange County will remain at the high levels seen in 2010. Los Angeles and Orange Counties will continue to have a maximum loan amount of $729,750 for a One unit property. The amazing thing about FHA continuing to allow loan amounts at this level, is that FHA also only requires a 3.5% own payment at these high levels. This makes it possible to purchase an Orange County home for a little over $750,000 with only 3.5% down. A First Time home buyer purchasing a property for $755,000 would only need $26,425 down payment.
The FHA Loan Program Continues to be Very Popular in Orange County
The FHA loan program began it's comeback at the end of 2007, just as many other "new fangled" loan programs were making a quick exit as a result of overly flexible underwriting guidelines. The help keep the real estate market from collapsing, FHA increased the loan limits to levels never previously seen, at least for the FHA program. For example, the FHA loan limit in Orange County in 2006 was $362,790. At the time, a $362,790 loan would not have purchase 95% of the homes in Orange County. But with "Jumbo" financing nearly non-existent, FHA, along with Fannie Mae and Freddie Mac, stepped in to increase the loan limits for Conventional and Government loans.
FHA Has Many Advantages for Orange County Home Buyers
FHA financing only requires 3.5% down payment, but that is not the only reason such a large percentage of Orange County home buyers choose FHA financing over other available options. FHA is also more flexible when it comes to credit. Most lenders will allow FICO scores as low as 640 on an FHA loan, even with the minimum down payment. Plus the "debt to income" ratios can easily be pushed to 50%, while Conventional financing cap's out at 45% in most cases. While definitely not a "subprime" program, the underwriting guidelines do tend to be more flexible and "makes sense" than Conventional financing. The only type of financing that can be considered better than an FHA loan would be a VA loan. VA loan eligible home buyers in Orange County can purchase a home for $593,750 with $0 down, which is hard to beat. (But to be eligible you must have been in the military.)
Orange County FHA Loan Limits
One Unit $729,750
Two Units $934,200
Three Units $1,129,250
Four Units $1,403,400
The first step in determining your options for financing a home is to talk with an experienced Orange County FHA loan expert. The loan officer should be able to prepare customized loan scenarios which will show you a complete breakdown, including purchase price, loan amount, payment, closing costs, and the amount needed to close. He should also be able to help you determine whether you will need the seller to pay your closing costs, and if so, how much of a credit will be needed. By knowing these things before making an offer on a home, the chances for a "smooth closing' are high.
Contact us for your Orange County VA Loan:
877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com
Tim - I think, it is good FHA did not lower loan limits in Los Angeles and Orange Counties. Thank you for the information.
Thank you for the information. I do worry though that the FHA program has become nothing more than government backed replacement of the subprime program.
It's a good thing they're keeping these loan limits. They're critical to California real estate and enabling buyers at the low end. Now let's hope rates stay low as well.
John - Yes, I'm glad the limits are unchanged, especially since the MBS market is still struggling.
Michael - If anything, FHA has been tightening their guidelines. On top of that, most lenders have "overlay guidelines" which makes it a even tougher to qualify. Subprime was all about high LTV, low FICO, no tax return verification (12 month bank statements for cashflow instead), and short term two or three year teaser rates before a big rate adjustment. FHA requires full income documentation (and always has) and offers low 30 year fixed rates. Most lender require a minimum FICO of 640. I'm really not seeing any "subprime" type borrowers getting approved for an FHA loan right now. Of course if the National Community Reinvestment Coalition is successful in suing 22 bank for not finding FHA loans for borrowers with sub 620 FICO's, then maybe the whole cycle will start sooner than I thought. But that's a topic for another post.
Bryan - I'm hoping rates stay low as well. We've seen quite a rise in rates over the past few weeks. They are still very low though.
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