Our low interest rates and high affordability are driving many first-time buyers into the market, and mortgage options are a hot topic. Many first-time buyers apply for loans backed by Federal Housing Administration (FHA), because FHA can allow for a loan to be secured with a down payment as little as 3.5 percent.
In 2015, FHA increased their loan limits for eight metro counties in Minnesota. Below, we outline the current limits, and what they could mean for homebuyers across both Minnesota and Wisconsin.
2015 FHA loan limits for Minnesota and Wisconsin
Beginning in 2015, the FHA loan limit for a single-family home in the Minnesota metro counties of Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Le Sueur and Mille Lacs was increased to $322,000. Across greater Minnesota, the loan limit is $271,050.
In Wisconsin, the 2015 FHA loan limit for a single-family home varies a bit more. In Kenosha County, the limit is highest, at $365,700. In Pierce and St. Croix counties, the 2015 FHA loan limit is $288,650. Milwaukee, Ozaukee, Washington and Waukesha counties have an FHA loan limit of $288,500. The FHA loan limit for all other Wisconsin counties is $271,050.
Though loan limits are set for FHA loans, you can increase your buying power with a higher down payment. The FHA loan limit is for the total amount of the loan, not the total price of the home. Before you set up an online search for homes under $271,050, be sure to calculate how much you have saved for a down payment.
For example, if you have your eye on a great old farmhouse in Le Sueur, with a price tag of $350,000, and you have 9 percent saved for a down payment ($31,500), you could still apply for an FHA loan. The loan amount would be $318,500—well within the loan limit of $322,000 for Le Sueur County.
Down payment minimums
If the down payment is your pain point, keep in mind that FHA has also recently decreased their down payment minimum. It’s now possible to secure an FHA loan with as little as 3.5 percent down.
We’ll run the math for you. Let’s say you have the 3.5 percent down payment minimum needed to secure the maximum loan limit of $271,050 in greater Minnesota and Wisconsin. That means that with your down payment of around $9,490, your maximum budget would be just over $280,000.
Where do you stand?
Above is a breakout of loan limits and a few situations, but the numbers are all hypothetical until you work with a mortgage loan officer to analyze your personal financial situation. Get started today and soon you’ll be on the exciting path to homeownership.