With interest rates still exceptionally low, employment levels exceptionally high, and conditions overall favorable, the US housing market should enjoy a strong year in 2020.
Along with the economic optimism and performance, signs point to a year of increased activity from the Federal Housing Administration in helping qualified individuals get into the homes they want. FHA loans provide many with their best opportunity to get into a new home.
At Ameris Bank, we proudly partner with the FHA to help as many of our clients as possible get into the home of their dreams at a reasonable price.
What the Federal Housing Administration Does
The FHA, an agency of the Department of Housing and Urban Development, works to provide qualified borrowers with low interest loans. Established as part of Franklin Roosevelt’s New Deal era reforms, the FHA is one of the largest providers of mortgage loans in the world.
FHA, however, does not directly lend money. It works with private sector lenders who dedicate themselves to great client service daily. FHA assists both lenders and borrowers by insuring loans, making them less risky for providers and more accessible for buyers.
Why Clients Desire FHA Loans
FHA loans offer buyers a number of benefits and advantages not found in an uninsured loan. For example, buyers only need a 3.5 percent down payment. It's our experience that this is much lower than is typically requested in a non-insured loan.
Lower credit scores also do not always disqualify those seeking a loan. If you have a credit score as low as 500, you may still qualify for a loan, with a deposit of 10 percent or more.
The FHA’s loan program aims to help those who have negative credit marks, but still have the ability to pay off a loan. Along with USDA, Veterans Administration, and other programs, they help a number of capable individuals achieve home ownership that would be otherwise impossible.
<h3>Loan Limits Expected to Rise in 2020</h3>
Growth in the housing market has pushed prices of single family homes higher. To respond to that development, FHA low-cost area home loan limits rose from just under $315,000 to approximately $332,000. Loan limits for higher cost area residential properties will rise from $727,000 to about $767,000
The differences in these numbers reflect the huge disparity of housing costs seen in different parts of the country. Homes that sell for hundreds of thousands or even millions in markets such as San Francisco or suburban Washington DC bear much lower prices in more rural and economically struggling urban regions.
FHA Housing Applications Will Continue to Grow Over the Next Year
As FHA interest rates continue to hover around 4 percent, many have sought to take advantage before conditions change. We feel this is a smart move.
Loan applications for not only new home buyers, but also refinancing, continued to rise in the last weeks of 2019. Refinancing applications grew by nearly 30 percent. Purchase applications declined slightly toward the end of the year, but remain five percent ahead of the same levels from this time last year.
With so many incentives for using FHA loans to purchase or refinance a home, it’s no wonder why we have seen growth in applications.
Reach Out Today
We invite your to learn more about FHA and other helpful federal loan programs available through working with Ameris Bank. Our staff understands that these programs are complex and will answer any questions about them and how we help clients obtain them. We can also set up an appointment to get your application started.
Call or message us today. Let us be your first step toward financing the home of your dreams.