September 7, 2017
Do FHA home loan limits change? Borrowers who want to know what the FHA loan limits for a given housing market might be have to contend with the possibility of changing limits depending on what time of year they are house hunting.
How FHA Loan Limits Work
The Federal Housing Administration calculates new purchase mortgage loan limits based on “the median house prices in accordance with the National Housing Act” according to the FHA official site. “FHA’s Single Family forward mortgage limits are set by Metropolitan Statistical Area (MSA) and county and are published periodically.”
FHA publishes updated home loan limits for forward mortgages and reverse mortgages on a yearly basis. The FHA official site states, “FHA sets these limits at or between the low cost area and high cost area limits based on the median house prices for the area.”
FHA Loan Limits Vary By County
No two housing markets are exactly alike, though many do fall into an average that tends to be the same. Some markets aren’t as expensive as others, and these may have lower FHA loan limits. Other markets are more expensive and will have higher FHA loan limits.
FHA Loan Limits Vary Depending On The Number Of Units In The Property
Naturally, the FHA loan limit would be higher for a four-unit property than for a single-unit home. So variations in lending limits (high-cost or low-cost markets) would include the variation for each type of home from single-unit to four-unit properties.
FHA Loan Limits Are Updated Yearly
Once-a-year loan limit updates typically happen toward the end of the year, but there is no set date for this to happen. In 2016 the update was published on December 1st, scheduled to take effect for case numbers effective after the new year. In rare circumstances the FHA has updated loan limits more than once per year, but this is not a common occurrence.
FHA Loan Limits In High-Cost Areas
FHA loan limits in high cost areas such as Hawaii, Guam, the Virgin Islands, and Alaska are higher than elsewhere due to elevated construction costs in these areas. Borrowers should expect to see FHA limits higher than $1 million for four-unit properties.
FHA Limits May Increase or Decrease From Year To Year
Though it’s more common to see limits go up, there’s always the possibility that some limits may actually decrease. There were no decreasing FHA loan limits in 2016, and for that calendar year the number of areas with increases in the limit were published as a list to help borrowers and lenders alike quickly see which were the affected areas.
Your FHA Loan Limit May Be Determined By The Date Of Your FHA Case Number
If you began your house hunt in one calendar year but did not get an FHA case number until the new year, the new year’s FHA loan limits would apply.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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