FHA / VA – High Balance and Conforming
Who is our FHA / VA – High Balance and Conforming Loan Best Suited For
FHA loans are typically geared towards borrowers who may not have the strongest Credit / Income / Asset profiles. Congress established FHA loans in 1934 to expand homeownership opportunities and help lower income borrowers obtain a mortgage. FHA mortgages are government-backed mortgages insured by the Federal Housing Administration.
FHA loans make it easier for aspiring homeowners to achieve homeownership without the need for a large down payment. This flexible and more attainable loan program is a popular choice for first-time homebuyers, by enabling borrowers to make down payments of as little as 3.5 percent.
This type of loan not only allows for a smaller down payment but less stringent credit score requirements, thus making it ideal for borrowers with little cash saved up and those who have less-than-ideal credit and cannot qualify for a conventional loan.
It is important to remember that the Federal Housing Administration does not actually lend funds for these mortgages. Instead, borrowers get a loan from an FHA-approved lender and the FHA only guarantees that loan.
VA loans are a more affordable option for qualified veterans, service members and their spouses. VA loans are backed, or guaranteed, by the Department of Veterans Affairs. There are different loan types with fixed or adjustable interest rates, and a range of loan terms.
VA loans, which the U.S. Department of Veterans Affairs (VA) guarantees, are available only to U.S. military service people, veterans, some surviving military spouses, and others who have served their country in specific ways.
VA loans offer many benefits, including no down payment loan options, favorable interest rates, and more lenient credit and income requirements than conventional mortgages. Note that VA loans are for primary residences only.
How FHA / VA – High Balance and Conforming Loans Work
FHA loans are insured by the Federal Housing Administration (FHA). The FHA protects lenders against defaults on payments. This makes it easier for you as the borrower to qualify and allows lenders to offer lower interest rates.
VA Loans are back by the good faith of the VA. The Department of Veterans Affairs (VA) does not lend money for VA loans, but does guarantee a portion of the loan made by private lenders such as banks and mortgage companies in case the borrower defaults on the mortgage. The VA essentially agrees to repay a portion of the loan to the bank if the borrower defaults or forecloses.
Program Highlights for FHA / VA – High Balance and Conforming Loans
- FHA High Balance Loan Limits are county specific per state. The highest loan limit that is available for some counties throughout the US is $765,600.00 for an SFR. The lowest we have seen for a SFR is $331,760. Loan limits higher for 2-4 Units
- As of January 1, 2020, veterans seeking to obtain what are commonly referred to as jumbo loans, or Veterans living in higher-cost markets, will no longer be subject to the Federally established VA loan limit aka Conforming loan limit maximums. This means veterans may obtain no-down payment VA-backed loans in all areas of the country, regardless of home prices. There is no catch other than that the removal of loan limits does not mean unlimited borrowing power without a down payment. You will still need to have sufficient income and meet a lender’s credit requirements to qualify for the loan amount. Lenders can continue to impose their own in-house maximum loan amounts. Loan limits will still apply in 2020 to veterans who have more than one active VA loan or have defaulted on a previous loan. VA Loan Limits are going away because the Department of Veterans Affairs can now back loans that exceed the conforming loan limit. A bill eliminating this cap was signed into law by President Donald Trump on June 25th, 2019. In addition, veterans looking to purchase a home, H.R. 299 will temporarily increase rates for certain loans by 0.15-0.30%.
- On FHA Loans maximum Loan to Value is 96.50%. On VA loans you could be eligible for 100% Financing
- On all FHA loans Mortgage Insurance is required for any loans LTV. This monthly mortgage insurance is paid monthly though your payment and this money is forwards to FHA. VA loans do not require monthly mortgage insurance to be paid at any LTV.
- To qualify for a FHA or VA loan it must be Full Documentation ONLY. We require Tax Returns / Pay Stubs and Bank Statements
- A minimum credit score of 620 is required for High Balance and Conforming loans.
- Max DTI can be as high as 50%. In some cases, we have seen higher DTI’s get approved. All approvals are generated through an Automated Underwriting system called DU (Desk Top Underwriter) or LP (Loan Prospector).
- There is no reserve requirement on Owner Occupied purchases or refinances however it does help.
- FHA loans are eligible for Purchase transactions or Refinance Rate and Term or Cash Out. Unlimited Cash Out options are available. Maximum LTV on an SFR Cash Out is 80%. If you currently have a VA loan, you can refinance up to 100% of your home’s value to get cash out. If you currently have a VA loan and do not need cash out, you may be able to refinance up to 120% of your home’s value
- The occupancy is limited to Primary Residence Owner Occupied Only
- Single Family Homes, Condominiums and 2- 4 Unit homes are all eligible for financing. If you are financing a 2-4 unit home the borrower must occupy one of the units.
- Non-Occupying Co Borrowers may be used to Qualify
- First Time Home Buyers are Eligible
- 30 Year Fixed, 15 Year Fixed, 5/7/10 year ARM – Available