FHA Loan Limits to Rise Jan. 1

The Federal Housing Administration yesterday announced the agency’s new schedule of loan limits, implementing slight increases in loan limits effective Jan. 1.

FHA Administrator Ed Golding cited the rise in loan limits to an increase in housing prices.

In high-cost areas, the FHA national loan limit “ceiling” will increase to $636,150 from $625,500. FHA will also increase its “floor” to $275,665 from $271,050. Additionally, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $636,150. This amount is 150 percent of the national conforming limit of $424,100.

FHA said because of changes in housing prices and the resulting change to FHA’s “floor” and “ceiling” limits, maximum loan limits for forward mortgages increased in 2,948 counties. There were no areas with a decrease in the maximum loan limits for forward mortgages though they remain unchanged in 286 counties.

Mortgagee Letter 16-20 (http://portal.hud.gov/hudportal/documents/huddoc?id=16-20ml.pdf) details the new limits. The FHA national low-cost area mortgage limits, which are set at 65 percent of the national conforming limit of $424,100 for a one-unit property, are, by property unit number, as follows:

–One-unit: $275,665
–Two-unit: $352,950
–Three-unit: $426,625
–Four-unit: $530,150

The FHA national high-cost area mortgage limits, which are set at 150 percent of the national conforming limit of $424,100 for a one-unit property, are, by property unit number, as follows:

–One-unit: $636,150
–Two-unit: $814,500
–Three-unit: $984,525
–Four-unit: $1,223,475

Mortgage limits for the special exception areas of Alaska, Hawaii, Guam and the Virgin Islands are adjusted by FHA to account for higher costs of construction. These four special exception areas have a higher ceiling as follows:

–One-unit: $721,050
–Two-unit: $923,050
–Three-unit: $1,115,800
–Four-unit: $1,386,650

Mortgagee Letter 16-19 (http://portal.hud.gov/hudportal/documents/huddoc?id=16-19ml.pdf) details new loan limits for HECMS. The maximum claim amount for FHA-insured HECMs will be $636,150 (150 percent of Freddie Mac) national conforming limit of $424,100). This maximum claim amount of $636,150 is also applicable to Freddie Mac’s special exception areas: Alaska, Hawaii, Guam and the Virgin Islands.
FHA’s minimum national loan limit “floor” is set at 65 percent of the national conforming loan limit of $424,100. 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.

FHA calculates forward mortgage limits based on median house prices in accordance with the National Housing Act. FHA’s Single-Family forward mortgage limits are set by Metropolitan Statistical Area and county. Loan limits for reverse mortgages are also calculated but these do not vary by MSA or county; instead, a single limit applies to all mortgages in the regardless of where they are originated.