An FHA Loan Doesn't Mean an Ugly House - By: IC

Many people who think of an FHA loan believe that the term means that you have to buy the cheapest home that you can find. This is not at all the case; in fact people are buying homes that are worth hundreds of thousands of dollars with this type of loan! How much you can spend will really depend on the area in which you live as well as what you can afford because a lender is not going to give you a loan that you cannot afford with your current salary and other debts.

Buy Your Dream Home with an FHA Loan

The fact of the matter is that you can buy your dream home with an FHA loan. While many people in the 30s, 40s, and even the 50s were getting these loans to buy homes for $10,000 today they are using these same loans to buy homes that are worth more than $700,000! Of course, not every borrower will qualify for a loan this big, but this just goes to show that the type of loan doesn't mean that you cannot buy a beautiful home, perhaps even the home of your dreams.

With the prices of housing increasing since the 1930s when the FHA loan was first introduced the Federal Housing Administration has obviously had to increase the mortgage limits and right now limits are at an all time high. Since July of 2006 the mortgage limits range from $362, 790 for high cost areas, $200,160 for low cost areas, and $544,185 in Alaska, Guam, Hawaii, and the Virgin Islands. The limits were updated again in March 2008 when the limit was increased to a minimum of $417,000 or 125% of the medium sales price, whichever is greater with the top end of the range being $729,750.

As you can see, you could buy a beautiful home within your price range no matter where you live in the United States. How much you qualify depends very much on your income as well as you income to debt ratio. Many people believe that if they earn a substantial amount of money that they will be able to qualify for one of the upper range loans, but this is not necessarily the case. When the lender and the FHA review your loan application they not only look at your worthiness based on income but also on other debts that you have. While you may make $10,000 a month you may also have car payments that add up to $2,000, child support of $1,000, and other debts such as credit cards that cost you another $2,000 a month. When you add all this up you may not be able to afford the $700,000 home that you want, at least not in the eyes of the lender and the FHA.

As you can see, an FHA loan could help you get into a beautiful home, but don't assume that you will be approved for an unlimited amount of funding because that is probably not the case. Those that are independently wealthy will usually find that there are other loan programs that are better suited to them, but you never know! This type of loan is a great option for many people, so don't think that you can't buy a home that you love when you have this sort of funding.

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