FHA loan limits and how much you may be able to borrow

Quick insights

• FHA loan limits are updated annually and vary depending on the location of the property—for details, visit HUD.gov.
• FHA loans are government-backed loans, which means they do not follow the standard set for government-sponsored enterprises like Fannie Mae and Freddie Mac.
• If the home you plan to purchase does not fit within FHA guidelines for single-family home loans, you may instead want to consider a jumbo loan, piggyback mortgage or other government-sponsored options.

The Federal Housing Administration (FHA) provides specialized mortgages designed with first-time homebuyers in mind. FHA loans typically have eligibility criteria that can make housing more accessible to a broader base of hopeful homebuyers. However, FHA loans have maximums which limit the size of the loan. In this article, we’ll describe the factors influencing FHA loan limits, how to find the limits for your area and ideas for financing homes that fall outside of the designated range.

What are FHA loan limits?

FHA loan limits restrict the size of the loan that can be funded by the program. The factors that influence the size of the loan are largely geographic and relate to the typical cost for housing in an area. By setting such limits, the FHA can manage risks of insuring FHA loans and help maintain stability in the housing market. FHA loan limits have a close relationship to the national conforming loan limit (CLL). That standard is put forth by the Federal Housing Finance Agency (FHFA) each year.

A key factor in FHA loan regulations: Conforming loan limits (CLL)

The CLL is based on home prices across the U.S., with variances for high-cost areas (such as parts of California and New York). The CLL exists to help promote stability in the housing market by limiting the size of mortgages offered by government-sponsored enterprises (GSE) like Fannie Mae and Freddie Mac. Loans which adhere to this limit are referred to as “conforming loans,” and those which do not are “non-conforming loans.”

How FHA loan limits are calculated

While FHA limits do not match the CLL exactly, the standard set by the CLL is used as a baseline for the FHA’s limits:

• FHA Low Cost Area: 65% of the national CLL
• FHA High Cost Area: 150% of the National CLLec-fha-loan-limits

The FHA does not set a minimum loan amount requirement. However, the FHA does establish a minimum loan limit (low cost) based on 65% of the conforming loan limit for low-cost areas. This is different from setting a minimum loan amount for individual loans.

The FHA’s loan limits also vary based on the number of units in a property. To qualify for a single-family home loan, the property must not include more than 4 units. Properties with more than 5 units will be treated as a multi-family home.

How to find the FHA maximum loan amount in your area

The most direct way to learn about FHA loan limits will be visiting the U.S. Department of Housing and Development’s website, HUD.gov. This searchable database allows you to look up both FHA and GSE mortgage limits for one or more areas, listing them by state or county. The tool could help with browsing an area to buy a home or finding another place which you may not have initially considered.

Consulting FHA-approved lenders, real estate agents and brokers

Depending on your preferences and the complexity of your circumstances, you may choose to seek professional advice. FHA-approved lenders (like Chase), experienced real estate agents and brokers can also provide up-to-date knowledge of FHA limits and be a valuable resource. Determining FHA loan limits is one part of a larger path to homeownership; working with a dedicated advocate may help answer this and other questions you have along the way.

Bottom line

The FHA loan limits are based off a standard which regulates the broader housing market, with adjustments to suit the FHA program’s intended borrowers. While current FHA loan limits are easy to check on the government database, you may want clarification on this question and others relating to FHA home loans. For personalized assistance, consider reaching out to a Chase Home Lending Advisor who can discuss your options.