Comments on: Things To Remember During The Home Buying Process

By: selling your home without an agent

selling your home without an agent — Wed, 22 Jul 2015 16:39:46 +0000

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By:

Tue, 14 Sep 2010 18:25:31 +0000

Since you did your homework and lender 1 basically confirmed what you found out, you know that lender 2 is pulling your chain. FHA county loan limits apply to any FHA loan so it’s not something a lender can arbitrarily change or ignore.

Since you know that you are not in a high cost area, your loan will be capped at $417,000 for any conventional financing. This means you can buy at $435,000,00 and as long as you can put 5% (which is the minimum for a conventional mortgage) down you fall just under the $417,000 limit.

I have a question for you. You said you will have 3.5 to 4.5% available for a down payment after you pay closing costs. Are you talking about the closing costs on the home you’re selling or the home you want to buy? If it’s the home you want to buy, ask for seller concessions to cover your closing costs which frees up more money for your down payment.
If you have any assets that you can liquidate that may help cover your down payment as well.

By: Dan

Dan — Tue, 14 Sep 2010 18:20:47 +0000

We are looking into buying a new house in the mid-$400k’s before we sell our current home, but this means that we would need a larger loan and that we would have less cash available up front for closing costs and downpayment. Buying before we sell our home means that after all the closing costs, we would only have 3.5% – 4.5% as a down payment.

I already checked and the HUD website’s FHA loan limits in the area where we would buy the new house are: FHA Forward $271,050 ($280,000) —AND— Fannie/Freddie $417,000. Depending on the offer that is accepted, we’d need to borrow between $425,000 and $435,000, and again, we’d have 3.5% and 4.5% for a down payment (after we pay closing costs).

We’ve talked to 2 lenders who only discussed FHA loans since apparently only FHA loans will allow as small as a 3.5% – 4.5 % downpayment:

(1) Lender #1 told us we have no choice but to get a conventional loan since we cannot get an FHA loan for more than $280,000 — end of story. He said there is absolutely no FHA loan available for loans over $280,000. As for non-FHA loans, Lender #1 said there is a cap for conventional loans of $417,000, and even then, we’d have to have a 12% down payment. In other words, we MUST sell ours first to have enough cash for closing/down payment.

(2) Lender #2 said we can borrow up to $450,000 on an FHA loan as long as we have a 3.5% down payment because our debt-to-income ratio is good enough. He said there is no $280,000 or $417,000 limit on FHA loans when the loan is a jumbo (aka, “non-conforming”) FHA loan. The debt-to-income ratio is all that matters.

What?! Something seems really wrong with what we’ve been told since the two lenders seem to contradict each other on the FHA “facts.” We understand that different lenders will only finance conventional loans under the terms they set, but the FHA rules are rules – they can’t be different from lender to lender?

Can someone explain and make some sense out of this?