These limits, issued by county and variable depending on the housing market and other factors, do not put a cap on the amount of the actual loan you can apply for under the FHA single family home loan program, but the limits do regulate the amount of the loan guarantee by the government.
The FHA loan limits are described on the FHA/HUD official site–the following information was issued last year and effective for the 2015 calendar year:
“Each year, FHA recalculates its national loan limit based on a percentage calculation of the national conforming loan limit.”
“Depending on those limits, FHA’s minimum national loan limit “floor” is at 65 percent of the national conforming loan limit. The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.”
“Conversely, any area where the loan limit exceeds the “floor” is considered a high cost area. The maximum FHA national loan limit “ceiling” is at 150 percent of the national conforming limit. In areas where 115 percent of the median home price (of the highest cost county) exceeds 150 percent of the conforming loan limit, the FHA loan limits remain at 150 percent of the conforming loan limit.”
The FHA/HUD official site adds that certain markets may be eligible for FHA loan limits, “above the national standard limit, and up to the national ceiling level, based on median area home prices.”
FHA has not, at the time of this writing, issued the loan limits for 2016, but they should be coming out quite soon.
When the new limits for 2016 do become available, the FHA and HUD will issue a mortgagee letter detailing those limits, any changes (or lack thereof, depending on housing market conditions in a given year) and conditions which may apply.
As soon as the 2016 FHA single family home loan limits are made available, we’ll discuss them in a blog post here.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: