FHA Loan Limits
If you're shopping for a new home but worry you won't qualify for a conventional mortgage, an FHA loan may be the best option for your situation. FHA loans are backed by the Federal Housing Administration, and they require mortgage insurance that's paid by the borrower. For this reason, they generally have fewer requirements and a lower down payment option than conventional mortgages. However, there are limits for what the FHA will insure as a loan. Here's what you need to know about those limits.
Loans Are Based on Property Size and Location
FHA loan limits are set for each property size: one unit, two units, three units or four units (single, duplex, triplex and fourplex).
Single Unit Limits
There is an upper limit for single unit FHA loans. However, this limit is the absolute highest that an FHA loan will insure, and it's only available in the most expensive parts of the country. The ceiling is $636,150 for 2017, and those areas include many cities in California and New York as well as select cities in Idaho, Colorado, Hawaii, Maryland, Massachusetts, New Jersey, North Carolina, Pennsylvania, Utah, Virginia, West Virginia and Wyoming. A few Hawaiian cities, such as Honolulu, have an even higher ceiling, reaching as high as $721,050. Other cities across the country have much lower limits, with the average ceiling between $300,000 and $400,000. The lowest limit, or "floor," is $275,665 for single units.
Duplex Unit Limits
Loan limits follow the same standards for duplexes, though the limit is obviously higher. For the same high cost of living areas mentioned for single units, the upper threshold is $814,500, with the exception of large cities in Hawaii, which have limits as high as $923,050. For average or low cost of living areas, the median threshold is around $400,000 to $500,000. The floor for duplexes is $352,950.
Triplex Unit Limits
Triplex FHA loan limits are set by the same geographic areas as single and duplex loan limits. For the more expensive areas listed above, loan limits cap at $984,525. Of course, the exception here is also Hawaii, which has limits ranging from $1,017,900 to $1,115,800. Again, Honolulu has the highest FHA loan limit in the country. Average and lower cost of living areas have a wide range of limits depending on the city, with an average of roughly $500,000 to $600,000. The floor for triplex units is $426,625.
Fourplex Unit Limits
Because of their larger size, fourplex units have the highest FHA loan limits. For New York, California and other areas with very expensive real estate prices, the limit caps at $1,223,475. Hawaii's limits are between $1,265,000 and $1,386,650. Across the rest of the country, the limit ranges from the low $500,000s to upwards of $1.1 million. The floor for fourplex units is $530,150.
How FHA Loan Limits Are Determined
FHA loan limits change every year or two, and they're reviewed at least annually. They're based on conventional loan limits set by some of the leading loan companies, such as Fannie Mae and Freddie Mac. These limits are created by the Federal Housing Finance Agency (FHFA), and they're determined by average home prices across the country (from the Home Price Index, or HPI). The FHA limit floor is usually 65 percent of the FHFA conforming loan limits. If you want to know the exact loan limits for a property in your area, you'll need to consult the complete list, broken down by geographical area, at HUD.gov.