The Federal Housing Administration (FHA) updates their loan limits on a yearly basis. Buyers must keep in mind them and how they may change. For this year, in many regions, the loan limits have improved to accommodate the improving market. Below is an overview of the NH FHA loan limits for 2016.
What Are FHA Loan Limits
Loan limits reflect the highest allowed loan values for an FHA loan. The loan value is less than the sales price. For example, if you purchase a home for $ 200,000.00
and your down payment is 3.5 percent , then your loan value comes out to $ 193,000.00
FHA Loan Limits Range
FHA loan limits vary by market. Median property values are compared against limits for national conforming loans. Conforming loans meet the Freddie Mac and Fannie Mae rules and can be transferred in secondary mortgage markets. FHA takes 65 percent of the conforming loan limit as the mark for their lower limit for low end markets. Low end markets are ones where 115% of the median real estate market value is less than 65% of the conforming loan limit. For high end areas, it can reach 150% of the national conforming loan limit. High cost markets are those where 115 percent of the median real estate prices are greater than 150% of limits for national conforming loans.
NH FHA Loan Limits For 2016
In low end markets, the loan limit is $271,050. Loan limits for high cost areas is $625,500. So, in no case will the limit fall less than $271,500 or be more than $625,500. Both the low and high end amounts are the same as 2014, but most areas are in between this range and will thus see a difference for 2016. Adjustments may be made for property type as well. In improvingmarkets, the loan limits increased significantly this year. This will allow home buyers to better compete for listings and improve their purchase price.
HILLSBOROUGH, Single Family $295,550
MERRIMACK, Single Family $271,050
ROCKINGHAM, Single Family $523,250
CHESHIRE, Single Family $271,050
Specific details can be found at https://entp.hud.gov/idapp/html/hicostlook.cfm.
Why Is It Important to Understand NH FHA Loan Limits For 2016
It is necessary to know your maximum purchase price when previewing homes. Buying a home over the limit may lead to a larger down payment or require you to revert to another loan alternative. For instance, if the loan limit is $ 300,000.00
and you have 3.5 percent down, then your price limit is $ 310,880.83
. Buying a house for $ 317,098.45
leads to a $ 6,217.62
shortage. The buyer must provide those funds. If you are a cash sensitive borrower, this may be detrimental. Remember that the maximum price limit might be different for each city that you are considering. It is helpful to know this before negotiating an offer.