When applying for a FHA reverse mortgage, you may want to know about the FHA reverse mortgage limits. These limits may affect you depending on the value of your house. In reality there are “hard” limits and “soft” limits.
A hard limit is the limit set by the FHA. At this time, 90% of reverse mortgages are FHA insured. Therefore, the limits set by the FHA are very vital.
As of this writing, the FHA loan limits varies from $200,160 and $362,790. The lower limits are applied to rural areas and the upper ones to large cities or states where the cost of living is higher. In addition, the limit can be adjusted up to 150 percent in Alaska, Guam, Hawaii and the Virgin Islands.
These limits are raised every year. But, to have a clear picture of how much you can borrow, you need to learn about the soft limits. Soft limits prevent owners of higher-priced homes to be able to borrow more than those with houses set at the FHA limit and also set the actual amount you can borrow.
The soft limit can be considered the actual limit for your property because it will determine how much you can borrow. The amount that you can borrow is calculated from the lower of the appraised value and the FHA limit.
The actual amount a homeowner can borrow depends on their age, the current interest rate, other loan fees and the appraised value of their home or FHA’s mortgage limits for their area. In general, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.
For example, a homeowner with a $100,000 loan at 9% interest could borrow up to 22% of the home’s value if he is 65. If the owner is 75, he could borrow up to 41%, and up to 58% if he is 85 years ancient.
Also, keep in mind that there are no asset or income limitations on borrowers getting this kind of mortgage mortgages. What this means is that you can have terrible credit or make no money or too much money and still qualify for the loan. Nobody can be excluded because income, assets, or credit history.
So, before you apply for this type of mortgage, talk to your trusted fha mortgage broker about the FHA reverse mortgage limits so that you can get a clear thought of how much money you can borrow by using a this mortgage.
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