FHA Follows Suit, Raises Single-Family Loan Limits for 2021

As expected, the Federal Housing Administration matched Fannie Mae and Freddie Mac in its single-family and Home Equity Conversion Mortgage insurance programs for 2021.

FHA said its new schedule of loan limits for calendar year 2021 for its Single-Family Title II forward and Home Equity Conversion (reverse) Mortgage insurance programs would increase to $548,250, matching that announced last month by the Federal Housing Finance Agency for conforming loans insured by Fannie Mae and Freddie Mac.

FHA Mortgagee Letter on 2021 Forward Mortgage Limits.

FHA Mortgagee Letter on 2021 Home Equity Conversion Mortgage (HECM) Limits.

In high-cost areas of the country, FHA’s loan limit ceiling will increase to $822,375 from $765,600. FHA will also increase its floor to $356,362 from $331,760. Additionally, the FHA-insured HECM limits for reverse mortgages will increase to $822,375 from $765,600. FHA’s current HECM regulations do not allow the HECM limit to vary by MSA or county; instead, the single HECM limit applies to all HECMs regardless of where the property is located.

FHA said “robust increases” in median housing prices and required changes to FHA’s floor and ceiling limits will result in maximum loan limits for FHA forward mortgages rising in 3,108 counties. In 125 counties, FHA’s loan limits will remain unchanged.

The new loan limits are effective for FHA case numbers assigned on or after Jan. 1.

“FHA has seen consistent increases in loan limits during the past few years, putting it in a position to serve a segment of borrowers that may be better-served by the conventional market,” said Assistant Secretary for Housing and Federal Housing Commissioner Dana Wade.

FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008 (HERA), to set Single Family forward loan limits at 115 percent of area median house prices, subject to a floor and a ceiling on the limits. FHA calculates forward mortgage limits by Metropolitan Statistical Area and county. The NHA, as amended by HERA, requires FHA to establish its floor and ceiling loan limits based on the loan limit set by FHFA for conventional mortgages owned or guaranteed by Fannie Mae and Freddie Mac. The national conforming loan limit for 2021 is $548,250. FHA’s 2021 minimum national loan limit “floor” of $356,362 is set at 65 percent of the national conforming loan limit. This “floor” applies to those areas where 115 percent of the median home price is less than the “floor” limit.  Any area where the loan limit exceeds this ”floor” is considered a high-cost area, and HERA requires FHA to set its maximum loan limit “ceiling” for high-cost areas at $356,362, which is 150 percent of the national conforming loan limit.

To find a complete list of FHA loan limits, areas at the FHA ceiling, areas between the floor and the ceiling, as well as a list of areas with loan limit increases, visit FHA’s Loan Limits Page.