For many potential buyers, the idea of putting only 3.5% down on a new home is very enticing. FHA has always been the go to channel for this low down payment and the opportunity to get a loan with less than perfect credit, lack of assets, relatively recent public record filings, etc.
But over the past 5 years, FHA has made many changes to their fees, mortgage insurance premiums, and guidelines. These changes haven't done much except raise the fees and premiums. In 2008, when comparing an a conventional loan to an FHA loan, all things considered (for example: down payment 5%, same loan amount, rate, etc.), the FHA deal was $60 cheaper per month. Today, the FHA deal will be approximately $130 more expensive per month than a conventional loan.
And their latest change is to their loan limits, which were lowered in 2014. The Chicago-land area will see a drop from the current $410,000 maximum to $365,700 for 1-unit properties.
The loan limits listed below are for the following counties in Illinois:
1 unit: $365,700
2 unit: $468,150
3 unit: $565,900
4 unit: $703,250
If you can put together (or get a gift for) an additional 1.5% and put the full 5% down, you can most likely go through the conventional channels, where you'll pay no up-front premium fees and the mortgage insurance wil be approximately 50% lower.
Please contact me at any time with questions...
Have a good evening...