Los Angeles County FHA Jumbo Loans

The new Los Angeles County, California FHA Jumbo loan limits have opened the doors to high-cost areas like Arcadia, Alhambra, Claremont, Glendora, Monrovia, Pasadena, South Pasadena and Walnut.

You can pay more for your home and actually save money with FHA’s new loan limits.

Offer $750,000 on a home and you will have to bring in at least 20% down on a FannieMae loan. That’s $150,000 cash. If you credit score is lower than 700 you will have to pay a $9,000 cash penalty for “risk based factors.” With a loan over $417,000 you will automatically pay at least a half-percentage rate higher. The most the seller can help with your closing costs is 3%. You’ll probably be over 4% with all your loan and fico penalties. Your rate would be over 6% today.

The seller nets $727,500 if they help with 3% of your costs.

Offer $760,000 instead on the same home in Arcadia, Claremont, Glendora, Diamond Bar, La Verne, Silverlake or Long Beach. As long as your credit score is over 620 you will have no risk penalties. You can bring in 10% down payment, or only $76,000…and that’s all!

The seller would net $728, 500 in this example….there is NO reason for them to say no.

Your rate can be as low as 4.75% today. Your payments have still gone up with the FHA loan, but only $240 and you have saved $83,000 cash! Factored out that is 345 months to recover the $83,000 at $240 a month.

___________________________________

Frequently Asked Questions

1. If I have the money, why do I care if it’s down payment?

Money in the bank or in another part of your portfolio is safer, more liquid and can actually grow, as opposed to being stuck in the house. There is also an opportunity cost when you can’t get to your cash for other purposes, or emergencies.

2. Why do I only have to bring in the down payment with FHA?

The seller is allowed to pay all of your closing costs up to 6%, including a permanent rate buydown.

3. Why don’t I just make an FHA offer to begin with!?

You can…and probably should. The point is, many, many people iincorrectlty think that, especially for higher-priced homes, they need 20% downpayment and 700 fico scores. That 100% false and I’ve shown how FHA can save you substantial amounts of cash, even if you pay more for the home.

___________________________________

Brian Wiesner