What is the maximum loan-to-value ratio for an FHA loan over $50,000?

The maximum loan-to-value (LTV) ratio for an FHA loan over $50,000 is indeed 97%. This means that borrowers can secure financing for up to 97% of the property's appraised value or purchase price, whichever is lower. This high LTV ratio is one of the distinguishing features of FHA loans, as they are designed to facilitate homeownership for individuals with lower credit scores or minimal down payment capability.

By allowing a maximum LTV of 97%, FHA loans enable borrowers to only put down 3% of the home’s value, making it easier for them to enter the housing market. This approach reflects the goal of the Federal Housing Administration to promote accessible mortgage financing, especially for first-time homebuyers or those who might not have significant savings. The relatively high LTV ratio contrasts with conventional loans, which typically require larger down payments and therefore lower LTV ratios.