FHA Jumbo Loan Program
The Federal Housing Administration (FHA) assists borrowers of modest means to buy and refinance a primary residence. In high cost areas, such as Fairfield County, the FHA helps borrowers obtain mortgages that exceed the conventional and conforming loan limits of $453,100. Mortgages over that amount are considered non-conforming, or jumbo, and an FHA jumbo mortgage is what may be needed to buy in Fairfield County.
Why an FHA Jumbo loan?
- High Loan Limits: While conforming loan limits are $453,100 in Fairfield County, the limits for FHA jumbo loans are:
- $601, 450 for single family home
- $769,950 for 2-unit property
- $930,700 for 3-unit property
- $1,156,650 for 4-unit property
- Smaller Down Payments: The down payment can be substantially lower than you’d be required to pay for most other types of jumbo mortgages. FHA jumbo down payments can be a low as 3.5% compared with 20% for conventional loans. On a $500,000 home, that’s the difference between a $17,500 down payment with FHA jumbo as opposed to $100,000 down payment with most other loans. The downside is you’ll be required to pay for mortgage insurance however FHA mortgage insurance is generally lower than conventional and along with a lower rate, it may still be more attractive than a conventional mortgage.
- High Debt-to-Income Ratio: Your debt-to-income (DTI) compares the amount of debt you have to your overall income. A low DTI demonstrates you have a good balance between debt and income; a high DTI shows that you have too much debt for your income. Conventional mortgages like to see a DTI of 36% or lower. FHA has more flexible standards with 43% usually being the cutoff.
- Lower Credit Scores: In general, credit requirements for FHA loans tend to be more relaxed than those for conventional loans. FHA loans require a minimum credit score of 580 and if your score is lower, you may still qualify with 10% down payment. Conventional loans require credit scores closer to 650.
An FHA jumbo loan means that you don’t have to put off your dream home in Fairfield County. Contact me today to find out more and to prequalify.
Kristina L. Refsbeck