The next thing the FHA should do is LOWER their LOAN LIMITS in many counties of the USA where they are set too high for the type of borrower the FHA services! They SHOULD HAVE already done so.
$697K in San Diego County is WAY TOO HIGH of a loan limit for a typical buyer who avails themselves of FHA financing. That is a joke, folks and the joke is on us.
I’ve posted here on numerous occasions that the FHA 203(b) program was originally formed to give low and moderate-income buyers (vast majority FTB’s) a “leg-up” into homeownership. Not a “luxury” home but a roof over their heads. That is all.
It wasn’t in any way, shape or form invented to assist buyers in the purchase of “move-up” or “luxury” properties or in “move-up” or “luxury” areas.
In SD County, the FHA loan limit should not exceed $300K. This would enable a typical FHA buyer putting 3.5% down to buy a home costing $310,500 … in other words … a “starter home.”
The 203(b) loan limits for 2-4 units are also way too high for SD County:
The new MIP’s are as they should be. The program is backed by taxpayers and $300K is more than enough risk to take on as no matter how high the MIP deposits and premiums rise, they will NEVER BE ENOUGH to cover the level of FHA defaults inherent in the type of borrower attracted to it (read: has VERY little downpayment saved up).
