When Do FHA Loan Limits Change?
Will they be higher? Lower? Or will they remain the same? Much depends on where you live.
Last time, the list of FHA mortgage loan limits was published on December 2, 2020, FHA issued Mortgagee Letter 20-41 which established the new FHA loan limits for purchase loans, AKA forward mortgages. The FHA also published Mortgagee Letter 20-42, announcing that year’s limits for FHA Home Equity Conversion Mortgage loans.
In general, FHA mortgage loan limits are published but do not take effect until the first day of the new year. Never before except in cases where the FHA comes in during the year with an adjustment to the loan limits.
That is rare but has occurred in the past.
What all this means is depending on circumstances (such as when the FHA and HUD release the new loan limits) you may be able to look up new FHA loan limits for 2022 before the new year actually begins. But even with the ability to look up those numbers, you won’t be able to get an FHA case number with those limits until they take effect.
Any FHA borrower who applies for a home loan prior to the new year will have to see which year the FHA loan case number is issued in--your FHA loan limit will depend on the date of that case number assignment.
That means for borrowers who get an FHA case number before New Year’s Day in the new year? Their rates will be whatever the rates were for the calendar year the case number is associated with.
Borrowers should know that FHA loan limits are not standardized in every single location. Depending on the housing market in a given state, loan limits vary depending on whether the market you're buying in is considered a high-cost area or not.
Mortgage loan limits for some areas may or may not change for a given area--even if some markets do experience higher limits. It all depends on certain variables and it is not uncommon for some areas to stay the same year over year.
FHA loan limits are adjusted based on review of housing market conditions; if there’s a particularly turbulent year in the housing market that may (or may not, depending) influence the new loan limits.
All house hunters will have to wait to see what the FHA and HUD decide to do in any given new year--but if you worry that you might wish to delay your home loan in anticipation of the new loan limits, it’s a smart move to ask the advice of your lender--will it really make a difference when you apply even with a potentially higher limit to consider?
Much of that answer depends on the individual borrower, their circumstances, and other variables.
What Is an FHA Loan?
Using an FHA Loan Calculator
Meeting FHA Loan Guidelines Improves Your Chances
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