FHA
Loan Limits

The FHA’s primary goal is to facilitate homeownership, particularly for low- to moderate-income borrowers.  As such, county limits exist to ensure that the Federal Housing Administration (FHA) loan programs remain accessible to a wide range of borrowers across different regions.

FHA Loan Limits refer to the maximum amount of money the Federal Housing Administration (FHA) will insure for a mortgage loan. These limits vary based on the geographic location of the property, typically determined by county or metropolitan area, and they are updated annually by the U.S. Department of Housing and Urban Development (HUD) based on home price trends.

National Standards
– Floor: This is the minimum FHA loan limit and applies to lower-cost areas. It is set at 65% of the conforming loan limit (set by the Federal Housing Finance Agency for conventional loans).
– Ceiling: This is the maximum FHA loan limit and applies to high-cost areas. It is 150% of the conforming loan limit.

Currently the FHA floor limit for a single-family home is $524,225, and the ceiling limit for high-cost areas is $1,209,750 for a one unit property.

Area-Specific Variations
– High-Cost Areas apply to areas where home prices are significantly above the national average, allowing for larger loan amounts. Places like California, New York, Hawaii and other regions have higher limits due to the elevated cost of housing.
– Low-Cost Areas: Regions with more affordable real estate, like parts of the Midwest or Southern states, will have lower FHA loan limits.

Multifamily Properties
FHA loan limits also apply to 2-4 unit homes, with the limits increasing with the number of units. A duplex, for example, would have a higher loan limit than a single-family home.

Why Loan Limits Matter
FHA loan limits are crucial for buyers looking to use an FHA-backed mortgage. If the price of the home exceeds the FHA loan limit in a particular area, the buyer would need to bring in additional funds or find an alternative financing method.

Special Circumstances
– Special Exceptions: Some areas, like Alaska, Hawaii, Guam, and the U.S. Virgin Islands, may have even higher FHA loan limits due to higher construction and housing costs in these regions.
– Economic Adjustments: Loan limits are adjusted yearly, reflecting economic conditions and housing market changes.

• County limits for FHA loans contribute to market stability by controlling the loan amounts insured by the FHA. By capping the loan size, it helps mitigate the risk of excessive lending and potential defaults. These limits align with the FHA’s goal of supporting responsible lending practices and reducing the likelihood of market disruptions.

• FHA loan programs are designed to offer more flexible lending standards compared to conventional loans. By establishing county limits, the FHA ensures that loans are available in both high-cost and lower-cost areas. This helps borrowers who may not qualify for larger conventional loans but still need affordable financing options to purchase a home.

• The FHA county limits help target assistance to areas with higher housing costs. In regions where the cost of housing is generally higher, the FHA loan limits are set at a higher level to accommodate the local market conditions. This allows borrowers in these areas to access FHA loans and benefit from the program’s features, such as low down payments and more lenient credit requirements.

• FHA county limits are not fixed and are typically adjusted annually based on changes in housing prices. These adjustments help ensure that the program remains relevant and responsive to market conditions, enabling more borrowers to participate in the FHA loan program and achieve homeownership.

• County loan limits provide a consistent framework for lenders and borrowers participating in the FHA program. By establishing maximum loan amounts for each county, it ensures uniformity and clarity in loan underwriting and processing. Lenders can rely on these limits to determine the eligibility of borrowers and the loan amounts that qualify for FHA insurance.

• FHA county loan limits contribute to overall market stability by preventing excessive borrowing and lending practices. They discourage the concentration of high-risk loans and help maintain balance in the mortgage market. Limiting loan amounts mitigates the risk of defaults and foreclosure, which can have broader impacts on the housing market and the economy.

• All FHA mortgage loans will be determined to be either a conforming or high balance loan. For
  homes which are located in what has been determined to be a high balance region, the FHA loan limits will vary depending upon the county.
• In regions where high balance limits don’t apply, any loan amount over $524,225  exceeds the maximum loan amount for that region.  
• FHA county loan limits contribute to overall market stability by preventing excessive borrowing and lending practices. They discourage the concentration of high-risk loans and help maintain balance in the mortgage market. Limiting loan amounts mitigates the risk of defaults and foreclosure, which can have broader impacts on the housing market and the economy.