New FHA Loan Limits for 2021

New FHA loan limits were recently announced, which is good news for home buyers and those looking to refinance their current loans. If you're new to loan limits and not sure why this is exciting news, here is a quick primer:

When you apply for an FHA loan, there's a limit on how much you can borrow before it's considered a jumbo loan, disqualifying you from all the  FHA benefits. The Department of Housing and Urban Development (HUD) recently increased the loan limits on FHA loans for most of the U.S., which is an excellent thing for home buying hopefuls across the country. 

How FHA Loan Limits Are Set

The conventional loans that Fannie Mae and Freddie Mac back have a standard loan limit. VA loan limits follow the same guidelines, but FHA loan limits are more complicated.

That's because the FHA uses two factors to define their lending limits. The first factor is the area you live in, and the other is the type of property you're purchasing. It typically works out that if you live in a low-cost area, the "floor" will be lower. In contrast, high-cost areas have a higher "ceiling." 

The FHA defines high-cost areas by averaging the income level and the average cost to purchase a property. They also take into consideration the market demand. 

The lending limits also differ depending on the type of property. A two-unit property, for example, will have a higher limit than a single-family home.

New FHA Loan Limits for 2021

The FHA loan limits for 2021 range from $356,362– $822,375. However, keep in mind that ceiling amounts vary by county. For example, the max loan amount on a single-family home in a low-cost county is $356,362, while the max in a high-cost county is $822,375.

Finding FHA Loan Limits For Your County

One way to determine your area's loan limit is to use the search feature on HUD's website. You can also use their search feature to find out the local limits on Fannie Mae and Freddie Mac loans. 

Of course, your agent and our office are available to assist you with this information. 

FHA Loan Limits and Reverse Mortgages

The FHA also backs up conforming home equity conversion mortgages, more commonly known as reverse mortgages. Unlike the FHA loan mentioned above, reverse mortgages have one set limit across the U.S., which is now $822,375 in 2021, up from $765,600 in 2020.

Applying for an FHA Loan in 2021

FHA loans have some of the best terms. And when we combine these new higher limits with low credit requirements and a low down-payment, you can see why home shoppers everywhere are thrilled. 

We're thrilled too! If you're looking to buy or refi your home with an FHA mortgage, you can get started by filling out the pre-qualification questions found conveniently on our site.