What Is A Second Mortgage and Its Benefits?

What Is A Second Mortgage and Its Benefits?

A second mortgage (sometimes just called a “second”) is when you take out a home loan against a property that already has a mortgage on it. When you get a second mortgage, you use your home as collateral to gain access to cash locked up in the value of your home. 

You can use this money to pay for nearly anything, which is why many homeowners apply for a second mortgage.

Types of Second Mortgages

Home Equity Loan

With a home equity loan, you get your money in one lump sum. You then pay back what you borrowed over an agreed-upon term with fixed payments. This is a smart option if you know exactly how much money you need to borrow or prefer receiving all the funds at once.

Let’s look at the pros and cons of a home equity loan:


  • Fixed interest rate: You’ll know your monthly payments in advance, making it easier to budget repayment.

  • Lump-sum proceeds: Flexibility to use the money however you want.


  • Closing costs: Closing costs range from 2% – 5% of the total cost of the loan. There may also be appraisal and title search fees.

  • Risk: The bank may foreclose your home if you default on your home equity loan.

Home Equity Line Of Credit (HELOC)

A HELOC is like a credit card, meaning you have a set credit limit where you can borrow as much or as little as you need. However, unlike a credit card or a home equity loan, this type of second mortgage has two time periods: 

Drawing period: During this time, you can withdraw whatever amount of money you want (up to your limit), making monthly interest payments only on what you borrow.

Repayment period: Requires repayment of the principal and any interest on the amount you borrowed. Borrowing is no longer allowed at this time. 

The pros and cons of a HELOC:


  • Flexibility: Use only what you need.

  • Delayed payments: Your payments begin when you withdraw money, not sooner.


  • Variable interest: Interest rate fluctuates based on the market. This could make it challenging to budget your payments.

  • Annual fees and other costs: Some HELOCs tack on a yearly maintenance fee, an inactivity fee, a minimum withdrawal fee, or even an early termination fee.

  • Risk: A HELOC uses your home as collateral so the lender could foreclose on your home if you don’t repay what you borrow.

How to Use Your Second Mortgage

  • Pay off a high-interest rate loan, potentially saving you hundreds or even thousands of dollars.

  • Fund home improvements like a kitchen remodel or adding another room to your home.

  • Fund big purchases like higher education, trade school, a vacation, or new home appliances.

  • Have the funds available in case of an emergency like the car needing repairs or a family member requiring medical treatment.

Second mortgages give you a wealth of options for using the money and how to repay it. Contact us today for more information and to quickly get access to your home equity.

What Does A Title Company Do?

What Does A Title Company Do?

A title company’s role is to verify that the current owner can legally transfer ownership to the home buyer –essentially, making sure the seller has the right to sell the property.

In this blog, we’ll go over how a title company determines legal ownership and the process of transferring the title. 

The Title vs. The Deed: Understanding the Difference

Although they may sound like the same document, a deed and title are very different. A deed is a legal document used to transfer the property from the current owner to the new owner. It’s signed on the day of closing.

On the other hand, the title is a document stating who owns the property and whether there are any roadblocks to transferring the deed. When you’re buying a new property, it’s the title company’s job to make sure the title is free of potential ownership claims before ownership is transferred. They do this by conducting a title search. 

What Does A Title Search Consist Of?

The title search looks for potential obstacles to the transfer of ownership.

Primarily, it determines whether others have rights to the property. However, a title search also looks for:

  • Outstanding Mortgages or Other Liens: All liens must be paid off at closing before the title can be transferred. This includes home equity lines of credit, unpaid tax liens, or possibly a loan taken out for a home construction project.

  • Unpaid HOA Fees: Consequences will vary as to what will happen if HOA fees are left unpaid –some stipulate that they can foreclose on a home if there are outstanding dues. Whatever the case may be, HOA fees must be paid before transferring the title.

  • Judgments: It’s possible to have a judgment that must stay with the property and not necessarily the previous owner. An example of this would be unpaid contractor fees and a judgment in the contractor’s favor.

  • Property Survey: The title company may order a survey to see if there are any encroachment issues and to verify that the home is within its boundaries.

Preparation Of The Abstract Of Title And Title Opinion

An abstract of title outlines the property’s ownership history and will also include things like inheritance and court litigations. 

An opinion of title is a legal document written by the title company. It states whether they believe the seller has a clear and valid claim to the property and whether they feel confident about insuring the title. Note that a lender will always require insurance on the title. This is also known as a lender’s title policy.  

An owner’s title policy, however, is optional but recommended. Here’s why.

Should You Get Owner’s Title Insurance?

Here are reasons to consider purchasing the optional owner’s title insurance:

  • If the home has changed hands a lot. A long list of past owners increases the risk that information was missed during a previous title search, and a past owner could still have rights to the property. 

  • If you can’t afford legal fees to dispute other claims to your property. Even if the claim has no merit, the legal fees to litigate can be expensive. 

  • Peace of mind. Know that your investment is always protected. Even if it turns out that a previous owner has a legitimate claim, you’ll still have the funds to buy a new property. 

Now that you know the basics of what a title company does, it’s time to secure a mortgage with confidence. Start the process online from our website or call us today!


The Basics of Buying A Foreclosed Home

The Basics of Buying A Foreclosed Home

Curious about buying a foreclosed home? Here’s what you need to know to get started. 

What’s A Foreclosure?

When a homeowner can’t keep up with their mortgage payments, they often have no other choice but to give up the property to the lender. These properties are called “foreclosures.”

Since the lender is eager to sell the home and resolve the debt, they will list foreclosed homes at competitive prices –often well below market value. 

This is what makes foreclosed homes so attractive to prospective buyers.

Finding Foreclosed Homes

Look for listings posted as legal notices or auctions in your local newspaper. You can also find foreclosed homes on a bank’s inventory list. You’ll want to search under “REO” or “real estate owned” properties.

HUD also maintains a directory that you’ll want to check out. They compile a list of homes owned by major mortgage investors, including those owned by government-sponsored entities Fannie Mae and Freddie Mac. It also includes listings for homes owned by the FHA and VA.

If you want to forgo all the hard work of searching, work with a real estate agent. They have access to the MLS containing every available listing of properties for sale, including foreclosed homes.

Learn About the Types Of Foreclosures

Short Sale

A short sale is when the current owner lists their property for sale for less than the balance owed on the mortgage. This is sometimes called a “pre-forclosure” property and requires lender approval. Since the sale proceeds go to the lender, they’ll have the final say on accepting or rejecting offers.


Buying a house at auction typically requires a cash payment and comes with some risks. Some homes are put up at auction without an appraisal or inspection, so you may not know the property’s condition or even its actual market value. If possible, ask to do a walk-through and arrange for a home inspection.


If the auction doesn’t result in a sale, the lender will hire a real estate agent to sell it in hopes of recouping what’s owed on the mortgage.

Risks Of Buying A Foreclosed Property

The biggest risk is that these homes are sold as-is. The government-owned homes might get structural repairs. However, for the most part, any repairs will fall on the buyer’s shoulders.

How To Buy a Foreclosed Home

Work With A Real Estate Agent

An experienced real estate agent can help you navigate the hurdles of buying a foreclosed home. 

Check Your Credit

Get your credit in good shape. Banks can be extra cautious about credit issues of potential borrowers looking to purchase a foreclosed home. 

Get Approved

You’ll want to get preapproved for a home loan from a mortgage professional to verify your income and assets.

Get A Home Inspection

Hire a certified home inspector to evaluate the home. 

Make An Offer

If it’s a short sale, your real estate agent will submit an offer to the current homeowner. However, remember that the lien-holder will have the final say. For auctioned homes, contact the trustee or attorney for assistance. If the house is bank-owned, your agent will submit the offer to the bank’s agent.

How Long Will It Take?

Bank-owned properties take longer to close than buying from an individual. But typically, it takes about 30 – 45 days for the sale to close.

Did you find this article helpful? Please share it and apply today to start your journey of getting a great deal on a foreclosed home!

Get the Facts About Escrow Shortages

Get the Facts About Escrow Shortages

An escrow account is for making payments toward your real estate fees like taxes and insurance. It helps make these fees more manageable through monthly installments rather than paying a large lump sum when these bills are due. There’s typically a minimum balance that must be maintained to ensure that you have enough money to pay the fees.

However, these fees can sometimes fluctuate, and when this happens, your escrow account could be short. This is called an escrow shortage. Here’s a rundown of why this occurs and what you can do about it. 

Escrow Account Basics

An escrow account breaks down the fees associated with homeownership into monthly payments. Typically, the following are included in an escrow account: 

  • Hazard Insurance: Covers damage to your property and meant to protect the lender from their losses should damage occur. The coverage may also have personal property and liability protection.

  • Flood Insurance: You may be required to have flood coverage if the house is located in a flood zone. 

  • Mortgage insurance: If your down payment was under 20%, you’ll pay private mortgage insurance (PMI) until you reach at least that amount of equity. This only applies to conventional loans.

  • Property taxes: Also known as real estate taxes.

  • Ground rents: If you own your home but not the land it’s sitting on, then the ground fees will be paid from your escrow account.

  • Special assessments: Refers to recurring fees levied by your county or other taxing authority.

  • Possible first-lien position charges: Any payment that could take priority over your mortgage should you default on the loan and the property needs to be sold.

When Does an Escrow Shortage Happen?

An escrow shortage is when your escrow account balance falls below the minimum required level. The shortage is often due to increasing charges from any of the above items leaving you with less than the required cushion in your account. 

In some cases, you may end up with an escrow deficiency. This is when your account doesn’t have enough money to pay for all the escrow items, like taxes and insurance, leaving you with a negative balance. When this occurs, the lender will pay the difference on your behalf, and you’ll pay the lender back, typically through one of these options:

  • Pay it off in full: One-time payment to the mortgage company.

  • Pay off over 12 months: Spread the payments out over the next year to pay it back over time.

Remember that even if you pay it in full, your monthly escrow payment will likely remain at a higher amount if the shortage was caused by a permanent tax or insurance fee increase. Thus, what you’ll pay into your escrow account will now reflect the new amounts due.

Are you new to the homebuying process? We can help! From answering questions to making it easy to apply for a loan online, we have the tools and knowledge to make your home buying process a breeze. Start your application today!


Home Inspection 101: A Homebuyer’s Guide

Home Inspection 101: A Homebuyer’s Guide

A home inspection alerts you to any immediate repair concerns plus gives you an idea of what it may cost to maintain the home in good condition. 

Let’s take a closer look at the home inspection process so you know what to expect, and what the inspection does and does not include. 

What to Expect During A Home Inspection

Before finalizing your offer to purchase a property, your real estate agent can arrange for a home inspection. The home inspector’s job is to look for any potential problems with the home and document their findings in a report. 

A home inspection isn’t the same as an appraisal. 

An appraisal estimates your property’s value, whereas a home inspection looks for problems in the home. Another difference is that lenders will usually require an appraisal before dispersing the funds. A home inspection, however, is optional. 

What Do Home Inspectors Check?

Home inspectors look for problems on the property’s major structures and features such as:

  • The basic structure: They’ll look for cracks on the ceiling or damage to the foundation.

  • Roof and attic: They’ll search for signs of damage to the roof’s exterior and look in the attic for signs of water damage, insulation issues, or damage to the chimney.

  • Basement:  Structural issues from water damage.

  • Plumbing: Good water flow, check for leaks or blockages, and test the hot water heater.

  • Electrical: Check that the electrical system is grounded correctly and review the circuit breaker, wiring, and outlets.

  • Appliances: Check that the large appliances (like your oven and dishwasher) and their connections are working. 

  • Garage: Inspect walls and ceiling for damage and test the garage door opener.

  • Other systems: They’ll check the furnace, air conditioning system, and sprinkler systems.

What Don’t Home Inspectors Check?

Because home inspections aren’t comprehensive, a separate inspection may be required to address these concerns: 

Well and septic systems: To test the water quality and inspect the septic system.

Sewers: Sewer inspections search for deep roots that can damage or block the sewer lines.

Lead paint: Lead paint is a significant health hazard, especially to young children. If your home was built in 1979 or before and there hasn’t been a lead paint inspection, you must get one before the loan can close.

Pest or termite: If the appraiser or home inspector believes the property may have a pest or termite problem, they may require you to get a pest inspection before the loan can close.

Chimney: While the standard home inspection looks at the fireplace, a professional chimney sweep may be needed to check the condition of the flue, joints, and interior.

Asbestos: Asbestos is a toxic construction material used in many older homes that requires removal. An inspection will let you know if the home contains asbestos. 

Mold: Mold can cause severe health issues. If your home shows signs of mold, get a mold inspection. 

Lot size survey: A lot size survey measures your property’s size and is sometimes required for zoning purposes.

Radon: Radon is a naturally occurring gas sometimes found inside homes. It’s known to cause cancer.

Your Guide to Refinancing Your Condo

Your Guide to Refinancing Your Condo

A condo refi is similar to refinancing any other home. The lender will look at your income, assets, and credit to ascertain your qualification. Plus, the condo will also be appraised to determine the property value.

However, since there are more variables when refinancing a condo, such as shared amenities, lenders usually conduct a condo review. 

It’s worth noting that not every condo will require a review. A conventional loan refi of a detached condo typically won’t need one since they’re considered a single-family residence. The same goes for condo projects with four units or less.

Otherwise, it’s safe to assume that you will need a review to refi your condo. Here’s what that might look like. 

Condo Review For Government-Backed Loans

To refi into a government-backed loan, the condo property typically must be on the approval list. FHA, VA, and USDA each have their own lists. If your condo isn’t listed, you have a couple of options. The easiest option is to apply for a conventional loan instead. 

The other option is to work with your lender and HOA to get your condo on the list. This option isn’t necessarily easy, but it may be worth exploring.

Condo Review for Conventional Loans

Condo approvals for a conventional loan work a little bit differently. Remember, getting a refi depends on both your qualifications as the borrower and the property’s qualifications. Here are the types of reviews used to qualify a condo for a refi. 

Limited Review

A limited review needs less documentation than a full review. Requirements can vary by state, but generally speaking, you’ll need:

  • At least 10% equity for a primary residence condo.

  • At least 25% equity for secondary and investment property condo.

  • Insurance coverage – Enough insurance to cover shared amenities, including hazard insurance.

  • Meets limits as to how many units are under the control of a single entity –For example, if a condo project has between 5 – 20 units, the max is two units owned by a single entity. 

If you don’t have enough equity or if a limited review isn’t offered for your desired loan type, then you’ll want to proceed with a full review.

Full Review

In a full review, you’ll need to submit everything from a limited review, plus:

  • Master insurance policy covering common areas, including at least $1 million in liability coverage per occurrence.

  • If the condo project has more than 20 units, bond coverage in case HOA funds are mismanaged.

  • A review of the HOA budget.

Refinancing your condo has a specific set of regulations, but they all start the same way –applying! Get started with an online application today, and we’ll guide you through the rest of the details. 

How To Remove Mortgage Insurance From Your Home Loan

How To Remove Mortgage Insurance From Your Home Loan

You don’t need to put a minimum of 20% down on a new home. That’s the upside. The downside is that you’ll need to pay mortgage insurance if your down payment is less than 20%. Read this post to learn the factors that determine if and when you can get rid of your mortgage insurance. 

What Determines Mortgage Insurance Removal?

The Type Of Mortgage Insurance

There are two types of mortgage insurance: private mortgage insurance (PMI) and mortgage insurance premiums (MIP). Conventional loans have PMI, while FHA –government-backed loans –use MIP. Knowing which type of insurance you have is important for understanding how you can remove it.

Who Holds Your Loan?

Determine who your loan investor is. Fannie Mae and Freddie Mac have different requirements regarding mortgage insurance elimination. They’ll look at your loan’s age and the amount of your down payment –among other factors –to see if you qualify to remove MIP.

Conventional loans also have varying qualifying criteria. We’ll explain more below. 

Loan-to-Value (LTV) Ratio

Most decisions about canceling mortgage insurance are based upon your loan-to-value (LTV) ratio. Your LTV is the amount of equity you’ve built up in your home versus how much you still have to pay off. Here’s a quick example.

Let’s say you purchased your home at $200,000 with a $20,000 down payment. Your LVT would then be 90%. As you continue to make payments, your LVT goes down.

An increasing property value also helps to inch your LVT downward. For example, if your home’s new appraisal is $225,000, your new LVT would be 80%–a desirable downward trend if you’re aiming to cancel your mortgage insurance.

Property Type

Removing PMI also depends on the type of property. Generally speaking, removing mortgage insurance on a one-unit primary residence is easier than removing it from a multi-unit investment property.

Age Of The Loan

Sometimes the loan’s age plays a factor in whether mortgage insurance can be taken off. See below for more details.

Property Improvements

Like we mentioned earlier, property value is a factor in determining if your loan is eligible to remove mortgage insurance. If you’ve made substantial improvements to your home and the value has increased, then you may be able to remove your mortgage insurance. 

How to get rid of PMI

  • Make extra payments and request PMI cancelation when your LVT reaches 80%. 

  • If your property value has increased significantly, request a new appraisal and eliminate PMI based on the new valuation. Note that you’ll still have to own your home for more than five years if it appraises 80% LVT or two years for 75% LVT ratio to be eligible for this tactic.

  • Wait for PMI to drop automatically. Request a PMI pay-off schedule from your lender to see when that will occur. 

  • Refinance! Combined with the appraisal tactic we mentioned above, you can refi into a new lower-rate loan. Not only will you get rid of your insurance payments thanks to a higher valuation, but your new low rate will save you money every month. 

How to get rid of  MIP

  • MIP must be paid for the full term on FHA loans with an original LVT ratio greater than 90%. 

  • For LTV ratios that range from 70% to 90%, it must be paid for 11 years.

  • Again, refinance! When you’ve achieved 80% LVT, you can refinance into a conventional loan that’s mortgage insurance-free!

Almost all loan programs that allow for less than 20% down payment will require mortgage insurance. While it might seem like a hassle, remember that it also allows you to buy a home a lot sooner. It’s not permanent –you can remove it or refinance your way out of it.

5 Best Renovations to Increase Your Home’s Value (Plus 3 Worst)

5 Best Renovations to Increase Your Home's Value (Plus 3 Worst)

Renovations make your home more enjoyable. Plus, if you do them right, they may even increase your home’s value. This comes in handy if you plan on selling your home in the future. But watch out! While some remodeling projects add value to your home, others do little to increase it and may even make your home less desirable to potential homebuyers.

Find out which renovations are the best and which are the worst.

Remember that we can help you get the funds to finance home renovations. With options like cash-out refinancing, FHA 203(k) rehab loan, a home equity loan, and HELOC, we can match you with a low-rate home loan to fund all your home repairs and upgrades. 

Best Home Projects to Boost Your Home’s Resale Value

Spruce Up The Kitchen

Over the past decades, the kitchen evolved from the food prep and eating area into a gathering space, similar to how we use living rooms. And for homes without formal dining rooms, the kitchen also serves as a place for entertaining. 

But how much can you actually recoup from your investment? Estimates range from 62% to 81%! An impressive investment, indeed.

Freshen up The Bathrooms

The added value from remodeling the bathroom is even more astounding. Generally speaking, you can recoup 87% to 93% of your investment. While adding a fresh coat of paint or replacing the faucet can easily transform the bathroom, you’ll get the most ROI from more significant renovations like re-tiling, tub replacement, or a complete bathroom renovation.

Renovate Your Attic or Basement

Adding “livable” square footage to your home is a quick way to increase your home’s value, but expanding your home may not necessarily be the best option. Instead, you can renovate the existing space in your home. Your attic can become a home office. Your basement could be a family room or work studio. 

Just remember to keep the new living space versatile enough to appeal to potential buyers if you plan on selling your home. 

Get Decked Out

It turns out that adding a deck is a worthwhile upgrade. The primary reason that decks have such a high ROI is that they add to the living area but do so inexpensively. Depending on what your deck is constructed of, you can expect to recoup about 106% to 122% of your initial investment.  

Boost Your Home’s Curb Appeal

First impressions count, so it makes sense to update your home’s exterior. While cleaning up the landscaping adds curb appeal, it won’t increase the value by much. Instead, focus on doing more significant updates like painting the exterior or installing a new fence. Replacing an old shingled roof or worn-out siding gives your home a major boost visually, functionally, and of course, monetarily. 

Home Renovations To Reconsider If You Plan To Sell

If your renovations’ purpose is to add resale value to your home, then some projects may not be the best choice. This is especially true about projects that are highly personalized to your own needs and tastes.  Check out these examples. 

Swimming Pools

Thinking about adding a pool? Keep in mind that families with small children or pets may consider pools to be hazardous. Still, others dread the additional work (and insurance costs) associated with owning a pool. 

Luxury Materials

As odd as it sounds, sometimes the highest quality upgrades won’t have the same resale value as a mid-range upgrade would have. For example, marble flooring in the bathroom may seem like a grand idea, but many home shoppers would rather have an attractive and easy-to-care-for tile like porcelain. 

Garage Conversions

Some homeowners convert their garages into a workshop or game room, which is an excellent idea if it works for you. But when it comes to adding value or square footage, it can actually hurt you. Most homebuyers would rather have a garage. 

Whatever your goal is, it starts with financing.

Whether you renovate to add resale value or customize your home, it begins with getting the right financing for your project. Applying is as easy as answering a few questions online, and one of our mortgage professionals will guide you to the best home loan financing option for you. 

Secrets to Winning A Bidding War In Real Estate

Secrets to Winning A Bidding War In Real Estate

While the housing market remains vibrant for buying and selling, the supply continues to be an issue in these past years.

Low supply happens when there’s an abundance of buyers but not enough houses for all of them. Many call it a “seller’s market,” which often results in a bidding war as multiple buyers compete for the same property. Here is how you can still get your dream home despite high competition. 

The Anatomy of a Bidding War

A bidding war in real estate happens when two or more parties compete for the seller’s acceptance of their offer. This stressful situation can be intensified if the owner or listing agent knows there’s a lot of interest and propose that everyone submit another higher and better offer.

Thus, you have now entered a bidding war. 

It’s easy to get caught up in the thrill of outbidding your competitor, but it’s essential to watch your step. You don’t want to enter into a purchase agreement that you can’t afford –all in the name of beating everyone else’s offer. 

That’s why we recommend applying for a mortgage first. Not only will you know right away how much you qualify for, but you’ll also have a trusted loan professional crunch the numbers for you, letting you know precisely what your monthly payments can be. And together with your real estate agent, you’ll know up to how much you can afford to bid.

But that’s not the only benefit of applying sooner rather than later. Read more below. 

Get Pre-Approved For a Home Loan

Mortgage pre-approval is a big deal when there are multiple offers on one property. Being pre-approved means that you already have the financial backing that you are claiming in your offer. It also means that you are ready to move forward with the purchase now, without needing to wait for a bank’s decision on your home loan worthiness. 

Pre-approval also means you’re bidding with confidence as well. Homeshopping is stressful enough without a bidding war and the uncertainty of making an offer without financial backing. Boost your confidence (and that of the seller) by going in already approved for a home loan. 

Drop Contingencies

Sellers looking to move quickly want as few obstacles as possible. One way to do that is to omit contingencies on your offer. The last thing a seller wants to do is go through all the steps of moving the deal forward and then have to put their house back on the market because the contingency deal fell through.

This may happen with an appraisal contingency where the lender won’t pay more for a house than it appraises for. But in a bidding war, you may have to go above the appraised value to win it. How buyers get around this is by paying the difference. For example, you can make an offer of the appraisal price plus $5,000. 

Just remember that it’s up to you to pay the difference. The lender will only pay up to the appraised value of the property.

Another contingency some buyers drop is the home inspection contingency. Some decide to waive the inspection entirely, while others have an inspection to be aware of possible issues but won’t have the sale contingent on the findings. 

Be Flexible

Motivated sellers love flexibility. For example, a seller may want to delay the closing date to let their children finish the school year before the move. Others may wish to move as soon as possible because they have a job waiting for them in a new city.

Whatever the case may be, the ability to be flexible with these types of situations is a huge bonus for many sellers.

Next Steps

Now that you understand how a bidding war works, you can use these strategies to get your offer to the top of the heap. Ready to get ahead? Start by getting pre-approved for a home loan with us today!

New FHA Loan Limits for 2021

New FHA Loan Limits for 2021

New FHA loan limits were recently announced, which is good news for home buyers and those looking to refinance their current loans. If you’re new to loan limits and not sure why this is exciting news, here is a quick primer:

When you apply for an FHA loan, there’s a limit on how much you can borrow before it’s considered a jumbo loan, disqualifying you from all the  FHA benefits. The Department of Housing and Urban Development (HUD) recently increased the loan limits on FHA loans for most of the U.S., which is an excellent thing for home buying hopefuls across the country. 

How FHA Loan Limits Are Set

The conventional loans that Fannie Mae and Freddie Mac back have a standard loan limit. VA loan limits follow the same guidelines, but FHA loan limits are more complicated.

That’s because the FHA uses two factors to define their lending limits. The first factor is the area you live in, and the other is the type of property you’re purchasing. It typically works out that if you live in a low-cost area, the “floor” will be lower. In contrast, high-cost areas have a higher “ceiling.” 

The FHA defines high-cost areas by averaging the income level and the average cost to purchase a property. They also take into consideration the market demand. 

The lending limits also differ depending on the type of property. A two-unit property, for example, will have a higher limit than a single-family home.

New FHA Loan Limits for 2021

The FHA loan limits for 2021 range from $356,362– $822,375. However, keep in mind that ceiling amounts vary by county. For example, the max loan amount on a single-family home in a low-cost county is $356,362, while the max in a high-cost county is $822,375.

Finding FHA Loan Limits For Your County

One way to determine your area’s loan limit is to use the search feature on HUD’s website. You can also use their search feature to find out the local limits on Fannie Mae and Freddie Mac loans. 

Of course, your agent and our office are available to assist you with this information. 

FHA Loan Limits and Reverse Mortgages

The FHA also backs up conforming home equity conversion mortgages, more commonly known as reverse mortgages. Unlike the FHA loan mentioned above, reverse mortgages have one set limit across the U.S., which is now $822,375 in 2021, up from $765,600 in 2020.

Applying for an FHA Loan in 2021

FHA loans have some of the best terms. And when we combine these new higher limits with low credit requirements and a low down-payment, you can see why home shoppers everywhere are thrilled. 

We’re thrilled too! If you’re looking to buy or refi your home with an FHA mortgage, you can get started by filling out the pre-qualification questions found conveniently on our site.