Home Buying in Chicago>Question Details

Chad Benson, Home Buyer in Chicago, IL

Is it possible to put down a small amount of cash, in order to bring the property down to FHA purchase guidelines?

Asked by Chad Benson, Chicago, IL Fri Jan 11, 2013

We can't afford a 20% down-payment for conventional loans but are interested in purchasing a foreclosure multi-unit. We can put down 3.5% for the FHA loan, but the property is listed slightly higher than the $524k guidelines. Can we pay cash to bring the purchase price down to $524k, then get a FHA loan to cover the rest?

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Sam Sharp’s answer
Steve - Im not trying to create issues - but please note that FHA limits vary based on property type and county - for cook county the limits are as follows
For a single unit (Condos included) The loan limit is $410k
A 2 unit is capped at $524,850
A 3 unit is capped at $634,450
A 4 unit is capped at $788,450
1 vote Thank Flag Link Fri Jan 11, 2013
Yes, you are correct.....I missed him stating multi-unit.....Thanks for the clarification.
Flag Fri Jan 11, 2013
Wieslaw (Wesley) Jura Vice President. NMLS ID 225274. Direct: 773-304-3412. Fax: 773-283-2788. Cell: 312-405-2404. wjura@unitedequity.us.
0 votes Thank Flag Link Sun Jan 13, 2013
Hi Chad! You should speak to your lender. It is possible to increase your down payment to help qualify, but it will depend on what your lender is willing to work with.
0 votes Thank Flag Link Fri Jan 11, 2013
Keep in mind FHA loan appraisers will look for habitability qualifiers (does the furnace work, does the hot water tank work, etc.) that the bank may or may not be willing to remedy. There are ways to make these deals work, make sure your realtor is experienced and can make the deal happen.

Erik Sachs
RpV Realty and Development
Cell 773/368-5515
Email esachs@rpvinc.com
0 votes Thank Flag Link Fri Jan 11, 2013
Thanks, Erik - is there a resource anywhere that tells us what the habitability qualifiers are that the loan appraisers look for?
Flag Fri Jan 11, 2013
Hi Chad,

It is a loan limit, not a purchase price limit. So, yes you can put additional money down to keep within the limits. I can recommend some great lenders to talk to for your pre-approval. There may also be conventional loan options that require less than 20% down.

Are you working with a Realtor yet to help you find what you are looking for? If not, I would be happy to talk to you about working together.

All the best,

Ivan Sagel'
312.515.7823
Ivan@atproperties.com
0 votes Thank Flag Link Fri Jan 11, 2013
Chad. You can pay cash to bring it in FHA guidelines. Then, you can go up to the FHA limits. Let me know if you would like a free prequalification. We will cover your closing costs.

Sean Cochran
Quality Mortgage Lending
630-470-6830 office
630-330-2229 cell
http://www.qualitymortgage4you.com
0 votes Thank Flag Link Fri Jan 11, 2013
Chad,

Mr. Sam Sharp gave you excellent advice!

I work with the lenders of Guaranteed Rate and will continue to refer business.


Manuel Brown, Broker
iMove Chicago
0 votes Thank Flag Link Fri Jan 11, 2013
You sure can. As long as the Base loan does not exceed county maximum, you can purchase a home substantially higher than the limits.....
0 votes Thank Flag Link Fri Jan 11, 2013
Because of FHA's maximum mortgage amount you will need to get down to $417,000 to meet FHA max loan requirements unless this is a Reverse Mortgage. If its a condo, the association will need to be FHA approved. We can help with that....


Steve Stenger
President
Condo Approval Professionals LLC
(847) 293-2962
0 votes Thank Flag Link Fri Jan 11, 2013
This is not your only hurdle. With these multi units, the rental income and the neighborhood averages for rent is also going to play a big part, and may lower the maximum loan amount. The $524k is just a cap, not a guarantee you can go that high.
Work with a Realtor who knows income property, and has a good lender versed in FHA to ensure you are making a good decision and an offer you can back up with a loan you can live with.

Feel free to drop me a line if you'd like more information or consultation.
0 votes Thank Flag Link Fri Jan 11, 2013
Absolutely - FHA has a limit on the loan amount - not the purchase price
You will just need to put down enough to get the loan amount down to the limit

Sam Sharp
Senior VP of Mortgage Lending
Guaranteed Rate
773 290 0455
0 votes Thank Flag Link Fri Jan 11, 2013
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