The Federal Housing Administration (FHA) has increased the loan limits for the Charlotte Metro Area. This includes YORK County, SC. This increase is a much needed expansion for FHA loans in the Charlotte market. Families needing a larger home that have limited funds for making a down payment can still get a quality fixed rate loan. FHA offers 97.75% financing, meaning that only 2.25% of the purchase price must be paid by the home buyer as a down payment. An additional .75% of the purchase price would then have to be paid by the home buyer towards closing costs, which brings the total required cash investment for a home buyer to only 3%!
FHA loans have always been looked at as loans for the first time home buyer or for lower income families. This is not the case. There are no income limits for FHA loans and you do not have to be a first time home buyer. These loans offer attractive low interest rates, and although ARM loans are available with FHA, their strength is with fixed rate loans.
There is one minor drawback to FHA financing. Mortgage Insurance Premium or MIP is required in both a financed upfront form and a monthly fee that is added to your payment. Conventional loans also require a similar insurance called PMI (Private Mortgage Insurance). The true difference is the upfront 1.5% that is typically financed into the FHA loan. The bottom-line is that with less than 5% down, the FHA loan would still have a better monthly payment than its conventional counterpart, and if the loan is paid off early a portion of the upfront MIP is refundable.