FHA Loan Limits

FHA (Federal Housing Administration) loan limits refer to the maximum loan amounts that can be insured by the FHA for home loans in a particular area. These limits are set by the Department of Housing and Urban Development (HUD) and are adjusted annually based on the median home prices in each county or metropolitan area. FHA loan limits are designed to ensure that borrowers have access to affordable FHA-backed loans, especially in areas with higher housing costs.

Here are some key points to understand about FHA loan limits:

  1. Local Variations: FHA loan limits can vary from one county or metropolitan area to another. In areas with higher median home prices, the limits are generally higher, and in lower-cost areas, the limits are lower.
  2. Single-Family vs. Multi-Unit Properties: FHA loan limits may differ for single-family homes, duplexes, triplexes, and four-unit properties. Higher limits typically apply to multi-unit properties to account for the additional costs.
  3. High-Cost Areas: Some areas with significantly higher housing costs, such as certain parts of California and Hawaii, may have even higher FHA loan limits. These are often referred to as “high-cost areas” or “special exception areas.”
  4. Calculation: FHA loan limits are based on a percentage of the conforming loan limits set by the Federal Housing Finance Agency (FHFA) for conventional loans backed by Fannie Mae and Freddie Mac. The specific formula used for this calculation can change from year to year.
  5. Updates: The FHA typically announces new loan limits for each year, so it’s essential to check to get the most up-to-date information on loan limits.
  6. Down Payment: FHA loans typically require a lower down payment compared to conventional loans, making them accessible to borrowers who may not have a large down payment. However, the loan amount must still fall within the applicable FHA loan limit for the area.
  7. Eligibility: To qualify for an FHA loan, borrowers must meet certain credit and income requirements.

Keep in mind that FHA loan limits can change from year to year – If you are considering an FHA loan, it’s advisable to consult with a professional when considering FHA and its limitations.