What are the limits of a FHA loan?

Buying & Selling Real Estate
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What are the limits of a FHA loan?

Jun Zao
Chicago, IL · Member since 2017 · 31 posts · 2 votes

So if I am looking a legal 4-unit multi-family at a list price of $899,000, would I be able to find a lender who is willing to approve an FHA loan with 3.5% down?

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
8y
Lending Tree is a joke of a source. Find a Local fha lender, preferably Not a big bank as they often have overlays more restrictive than the fha guidelines.
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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y
    Google up fha limits for your zip code.....it varies city to city.
    1Reply
  • Jun Zao
    OP
    Chicago, IL · Member since 2017 · 31 posts · 2 votes
    8y
    Originally posted by @Wayne Brooks:

    Google up fha limits for your zip code.....it varies city to city.

     I just did that and found that for a 4-unit in Chicago the limit is $703,250.

    But now my next question is, are the lenders out there willing to lend this much even though it is approved?

    0Reply
  • Michael Cohen
    Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
    8y
    Yes they will lend to you, but not as an FHA loan. HUD writes the guidelines, and lenders follow the limits they are given.
    0Reply
  • Jun Zao
    OP
    Chicago, IL · Member since 2017 · 31 posts · 2 votes
    8y
    Originally posted by @Michael Cohen:

    Yes they will lend to you, but not as an FHA loan. HUD writes the guidelines, and lenders follow the limits they are given.

     I don't understand.

    If not FHA, then what?

    0Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y
    Originally posted by @Jun Zao:
    Originally posted by @Michael Cohen:

    Yes they will lend to you, but not as an FHA loan. HUD writes the guidelines, and lenders follow the limits they are given.

     I don't understand.

    If not FHA, then what?

    A legal 4 has a loan limit of $703k. You can buy it for whatever you want, you just pay the difference between the purchase price and the loan limit. Here are the Chicago specific loan limits for FHA and the 5% down conventional program

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    1Reply
  • Jun Zao
    OP
    Chicago, IL · Member since 2017 · 31 posts · 2 votes
    8y
    Originally posted by @Brie Schmidt:
    Originally posted by @Jun Zao:
    Originally posted by @Michael Cohen:

    Yes they will lend to you, but not as an FHA loan. HUD writes the guidelines, and lenders follow the limits they are given.

     I don't understand.

    If not FHA, then what?

    A legal 4 has a loan limit of $703k. You can buy it for whatever you want, you just pay the difference between the purchase price and the loan limit. Here are the Chicago specific loan limits for FHA and the 5% down conventional program

    But I was on the lendingTree website. For a purchase price of more than 300,000 the query outputted no lenders for FHA loans.

    0Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y
    Lending Tree is a joke of a source. Find a Local fha lender, preferably Not a big bank as they often have overlays more restrictive than the fha guidelines.
    2Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y
    Originally posted by @Jun Zao:
    Originally posted by @Brie Schmidt:
    Originally posted by @Jun Zao:
    Originally posted by @Michael Cohen:

    Yes they will lend to you, but not as an FHA loan. HUD writes the guidelines, and lenders follow the limits they are given.

     I don't understand.

    If not FHA, then what?

    A legal 4 has a loan limit of $703k. You can buy it for whatever you want, you just pay the difference between the purchase price and the loan limit. Here are the Chicago specific loan limits for FHA and the 5% down conventional program

    But I was on the lendingTree website. For a purchase price of more than 300,000 the query outputted no lenders for FHA loans.

     I don't know about lending tree, find a local lender.  Either way you can't put 3.5% down on that property.  

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    Second City Real Estate4.821 Reviews
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    1Reply
  • Jerry Padilla
    Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
    8y

    @Jun Zao

    I am glad to answer any FHA questions that you have. FHA is a low down payment program only requiring you to pay 3.5% down. Cook County has a limit of $703,250 as you have stated. Conventional has a limit of $815,650 but you will be required to put down a minimum of 20%. You would have to pay the difference as well above any of these ceiling limits. The only financing that will go above these limits would be a Jumbo loan, but that is going to be difficult for a 4 unit property.

    FHA also has a self sufficiency rule, that you have to when you to abide by when you are Purchasing a 3-4 unit multi-family - The full fair market rent determined by the appraiser must meet or exceed the mortgage payment. Also including a 25% vacancy factor.

    I am always glad to answer any questions that you have on FHA Financing.

    @Brie Schmidt has an excellent reputation on this site and can guide you with finding a property that fits your budget, and qualifications.

    1Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y
    Originally posted by @Brie Schmidt:
    Originally posted by @Jun Zao:
    Originally posted by @Michael Cohen:

    Yes they will lend to you, but not as an FHA loan. HUD writes the guidelines, and lenders follow the limits they are given.

     I don't understand.

    If not FHA, then what?

    A legal 4 has a loan limit of $703k. You can buy it for whatever you want, you just pay the difference between the purchase price and the loan limit. Here are the Chicago specific loan limits for FHA and the 5% down conventional program

     UPDATE:  Chicago increases the conventional loan limits as of Monday

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    Second City Real Estate4.821 Reviews
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    0Reply
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