On December 2, 2020, the U.S. Department for Housing and Urban Development (HUD) announced its new 2021 limits for single-family homes. This is a significant announcement if you are considering applying for a Federal Housing Administration (FHA) loan in 2021. An FHA loan is a home mortgage that is federally insured if the borrower defaults on payments to the loan. FHA loans are a desirable option for first-time homebuyers since the down payment minimum is extremely low at 3.5% when compared to a conventional loan that commonly requires a down payment of at least 20% to avoid private mortgage insurance (PMI).
As a first-time homebuyer, you most likely have heard that the Federal Housing Administration (FHA) could help you take out a mortgage to fulfill your homeownership dreams. FHA loan is popular because it allows you to borrow funds to buy a home even if you don’t qualify to take out a conventional loan. Taking out an FHA loan is worth considering this year as the agency has increased the maximum loan amount you can borrow. Here are the FHA loan basics that you need to know as a first-time homebuyer: