December 4, 2020
Conventional Loan
A Conventional Loan is a mortgage loan that is not insured or secured by any government program or entity. The borrower will pay all insurance costs. These loans are available through private lenders only, such as mortgage companies, banks, and credit unions. Conventional Loans are the most common of loan types because of low interest rates, opportunity for a low down-payment, a wide range of term lengths, reduced insurance, and their ability to be quickly processed.
Starting January 1, 2021 the new Loan Limit for a one-unit home on a Conventional Loan will be $548,250.
For the remainder of 2020, the Loan Limit for a one-unit home on a Conventional Loan is $510,400.
FHA Loan
An FHA Loan is a mortgage loan backed by the Federal Housing Administration. Nearly 1 in 5 homebuyers have this type of loan. An FHA Loan includes two types of insurance; Upfront Mortgage Insurance Premium and Annual Mortgage Insurance Premium. The Upfront MIP is typically paid upfront however, can be financed within your loan. The Annual MIP is paid monthly. An FHA Loan is a great option for first time homebuyers considering the lower down-payment requirements based on your credit score. This loan type also allows you to use gifts as a method of payment for closing costs and allows for more leniency regarding your debt to income ratio.
Starting January 1, 2021 the new Loan Limit for a one-unit home on an FHA Loan will be $356,362.
For the remainder of 2020, the Loan Limit for a one-unit home on an FHA Loan is $331,760.
VA Loan
A VA Loan is a loan secured by the Department of Veteran Affairs. VA Loans are available only to military personnel, holding both active and veteran status. These loans are guaranteed by the Federal Government, however, are issued through private lenders such as banks and mortgage companies. VA Loans offer a $0 down-payment option and no minimum credit score requirement however, private lenders that offer VA Loans may hold their own requirements for credit scores. Borrowers may use this loan type to both purchase their primary residence or to refinance an existing mortgage.
Starting January 1, 2021 the new Loan Limit for a one-unit home on a VA Loan will be $548,250.
For the remainder of 2020, the Loan Limit for a one-unit home on a VA Loan is $510,400.
USDA Loans
A USDA Loan is a type of mortgage loan issued through the U.S. Department of Agriculture. These loans were created for low-income suburban and rural areas. This loan type is one of the lesser known loan types available. USDA loans, while guaranteed by the USDA, are issued through a private lender such as a bank or a mortgage company. They require a $0 down-payment for eligible homebuyers and offer low interest rates. However, should your down-payment be too little or $0, you will be required to pay a Mortgage Insurance Premium.
The maximum loan amount for a USDA Loan is based on the borrowers ability to qualify.
Contact your local Mortgage Loan Officer to find out loan limits for multiple unit homes!
