Common Questions About FHA Loan Limits

July 18, 2020

Do you need answers to common questions about FHA home loan limits? FHA mortgages have limits established by county, and those limits will vary depending on whether the housing market in question is in a high-cost area, a low-cost area, or one that is “typical”. FHA home loan limits are easy to understand once you know a few basics about how these limits work.

FHA loan limits have nothing to do with the borrower’s financial qualifications--you can’t qualify for a higher loan limit by having a better FICO score, for example. These limits are offered to all borrowers and aren’t affected by your credit report or other factors.

How Are FHA Home Loan Limits Set?

FHA home loan limits are set nationwide every year--the annual limits are posted at the end of the year by the FHA and HUD, and they take effect on 1 January every year. The limits vary by county and as mentioned above, high and low-cost areas will feature a different “floor” and “ceiling” for FHA loans. The limits are set by the FHA and HUD and are based on a percentage of the Fannie Mae and Freddie Mac Conventional Loan Limits.

How FHA Home Loan Limits Work for Multi-Unit Homes

FHA loan rules allow the purchase of a primary residence with an FHA home loan, but these homes may have as many as four living units. The FHA loan limit is higher for homes with more units. You aren’t restricted to the same FHA loan limit for a four-unit home as you are for a single-unit property.

Can I Get An FHA Mortgage Loan for More Than the Loan Limit?

It is possible to get an FHA mortgage for an amount higher than the FHA loan limit, depending on circumstances and the borrower’s financial qualifications. In general, a higher FICO score may be required to apply for a loan that exceeds the limit. Ask your loan officer about FHA Jumbo Loans and what it takes to qualify for one.

FHA Home Loan Limits for 2020

As you might have guessed, FHA loan limits for 2020 are not restricted to a single list, but three. One each for high-cost markets, low-cost, and the average. The typical FHA loan limit “floor” nationwide for a single family home is $331,760 and that generally applies for roughly 80% of all counties in the United States. For 2020, FHA home loan limits in high-cost and low-cost areas are as follows:

FHA Loan Limits In Low-Cost Housing Markets
 

• 1-unit home : $331,760
• 2-unit home : $424,800
• 3-unit home : $513,450
• 4-unit home : $638,100

FHA Loan Limits In High-Cost Housing Markets
 

• 1-unit home: $765,600
• 2-unit home: $980,325
• 3-unit home: $1,184,925 
• 4-unit home: $1,472,550

How Are FHA Loan Limits Determined for Multi-Unit Properties?

According to the HUD official site, Limits for multiple-unit properties are determined each year as “fixed multiples of the 1-unit limits.”

Can FHA Loan Limits Change More Than Once Per Year?

It’s rare, but the FHA and HUD have issued updates to their loan limits more than once per year when warranted. Normally the updates are announced sometime in December.

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