FHA Loan Maximum Amounts for 2019
How much variation is possible? That depends on the housing market you are purchasing in; FHA loan rules do not specify one set dollar amount that establishes a limit for how much loan the FHA will guarantee. That said, there are plenty of housing markets do feature the same general FHA loan limit based on calculations made on a yearly basis.
In addition to housing market limits, FHA loan limits are also affected by the loan-to-value (LTV) ratio which may vary in each transaction. The LTV is a calculation of the percentage of the loan satisfied by the down payment. Typical FHA single family forward mortgages include an LTV of 96.5% based on a minimum down payment of 3.5%. (In some cases, a higher down payment may be required based on a borrower’s financial qualifications.)
HUD 4000.1 discusses maximum mortgage loan amounts, starting with the following:
“A Mortgage that is to be insured by FHA cannot exceed the Nationwide Mortgage Limits, the nationwide area mortgage limit, or the maximum Loan-to-Value (LTV) ratio. The maximum LTV ratios vary depending upon the type of Borrower, type of transaction (purchase or refinance), program type, and stage of construction.”
Furthermore, “Under most programs, the maximum Mortgage is the lesser of the Nationwide Mortgage Limit for the area, or a percentage of the Adjusted Value.” HUD 4000.1 also defines the Adjusted Value as being the lesser of the purchase price of the home, minus any inducements to purchase or the Property Value.”
HUD 4000.1 also addresses how mortgage limits are calculated. “Mortgage limits are calculated based on the median house prices in accordance with the statute. FHA’s Single Family mortgage limits are set by Metropolitan Statistical Area and county and will be published periodically. FHA’s Single Family mortgage limits are available by MSA and county, or by downloading a complete listing.”
The FHA publishes updated limits effective for each calendar year, which the FHA/HUD official site says are set “at or between the low cost area and high cost area limits based on the median house prices for the area.”
The updates to FHA loan limits for the upcoming year are often published a few weeks prior to the start of the following year, but in some cases delays have occurred due to legal or legislative issues. The FHA/HUD official site issues announcements and status updates in such cases.
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