How Much FHA Loan do I Qualify For? | 2022 Loan Limits Released!

So, how much FHA loan can I afford?

This is such an important question because how much you qualify for with an FHA loan is going to depend not only on where you live but also on what you can qualify for in terms of your debt to income ratio.

And there’s a big difference between what you can afford and what you can qualify for.  So let’s go ahead and let’s talk about this a little bit and let’s talk about what I can afford.

What Can I Afford?

Now, when you talk about what you can afford, we’re really talking about two factors that determine what you can afford.  There are two restrictions that you’re going to run up against when you’re trying to see how much you qualify for, and these two restrictions are your debt to income ratio, and the state and the county that you’re going to buy in or that you live in now

When it comes to FHA, the debt to income ratios are much more lenient and much more flexible than any other debt to income ratio.  This means that you could afford a higher loan amount with a FHA loan than you could with a conventional loan, for example.

Your debt to income ratio is the total amount of your housing payment is allowed to be as a percentage of your total income after paying all of your debts.

The front-end debt to income ratio is what percentage of your bills are that show up on your credit report as a percentage of your gross monthly income or your qualifying calculated income.

Income is a totally different topic that we have lots of videos on that as well. Your back-end ratio is what your maximum debt to income ratio is or what it can be.

What is the Maximum FHA Loan I Can Qualify For?

Because you have debt to income ratios and you have the county the limits, the maximum you can qualify for first and most importantly is determined by the maximum loan limit in the county.

So if let’s say you’re a, as long as your debt to income ratio meets the FHA guidelines, the published loan limit would be the maximum.

That you qualify for now, if your debt to income ratio is too high, you have to lower the loan amount until your debt to income ratio lines up with what the FHA guidelines are.

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And in that case, the maximum that you qualify for is not going to be the maximum loan limit. It’s going to be the maximum that you qualify for based on your debt to income ratio.

Now here’s where it gets really exciting.  If your debt to income ratio is fine and you had run into issues maybe last year and 2021 with the loan limits, 2022 FHA released new loan limits and they’ve been increased across the country.

2022 FHA Loan Limits

Across the country is $420,680.  If you live in a high-cost area like California or some of the coastal counties, the maximum is $970,800

Unlike conventional loan limits where there’s one loan limit and it’s the same in every county, in every state in the country, FHA is going to be different.

It is going to break down by the county that you live in. But the good news is with FHA loan limits going up in 2022.   This incredibly flexible loan is available to so many more people.

More Reasons Why FHA is a Great Loan

Now, since we’re on the topic of FHA loans FHA loans are unbelievably flexible, and I just want to share a little bit more awesomeness about FHA loans that really make this one of the best choices to qualify.

To purchase a home in 2022 first of all, the extremely low down payment, you’re only required with FHA to use a three and a half percent of the purchase price as the down payment.

Now, remember the loan amount is the loan part, not the purchase price. So the loan amount is the purchase price. After you’ve made.

The loan amount is after you’ve made your down payment. So you only have to have a 3.5% down payment.  And the great thing about this is whether there’s one unit or four units.

If you’re buying a duplex or a three-unit property or a four-unit property, that number goes way, way up. And whether you’re paying, whether you’re buying a single-family home for 420,680, or you’re buying a four-unit property for $900,000, you still only have to put 3.5% down with an FHA loan.

You cannot do that with a conventional loan. The other great thing about FHA is it’s much more flexible with the credit scores. You can have much lower credit scores. In some cases, you can go be lowest 600 credit score and still qualify for an FHA loan.

The debt-to-income ratios are much more flexible when using an FHA loan.  The maximum debt-to-income ratio on a conventional loan is lower than the front-end debt-to-income ratio (not including the mortgage payment) using an FHA mortgage.

So at the end of the day,  FHA is probably the best option for first-time buyers, or if you have less than perfect credit or if your debt to income ratio is, and you can’t qualify for a conventional loan.