Question:

Should I get an FHA insured mortgage if I live in California?

Answer:

Well, currently FHA insured mortgage loans make not more than 6% of all loan originations, while in 1980s FHA had a share of over 22% of originated mortgages. The current percentage of FHA mortgage share makes the whole idea of the agency less relevant, as few borrowers are benefitting from FHA insured mortgages.

Especially for California, New York, Connecticut, Massachusetts and other high-cost areas, you are not entitled to any benefit as the FHA loan limit is around $362,000, calculated as 87% of the maximum Freddie Mac loan of $417,000 for high-cost areas. Since the average cost of a single unit property in Orange County, CA can very well exceed $400,000 and even go over $600,000, the answer is no, you cannot yet benefit directly from an FHA insured mortgage in California, but the Senate is working on increasing FHA loan limits and especially in some high cost areas they are expected to top and exceed $700,000; still, FHA loan limits have not yet been adjusted yet.

The FHA insured mortgage loans are on their way to become a good alternative to all the subprime lenders loans who flooded the market extending unbearably high amount loans to people who should never even applied for those.

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