FHA Loan Limits


FHA Loan Limits For 2021

The Federal Housing Administration (FHA) announced for 2021 their new schedule of loan limits for the upcoming year (Source). Due to a steady increase in housing prices, most areas in the country will see a slight increase in loan limits in 2021. These loan limits are effective for case numbers assigned on or after January 1, 2021, and will remain in effect through the end of the year.

For the year 2021, the FHA loan limit is established at a floor of $356,362 for single-family home loans and it is one of the FHA loan requirements. The aforementioned FHA loan amount is a minimum that is currently covering 83% of all the counties in the US, as we will see below in more detail.

fha loan limits

FHA has increased its loan amount, or “floor,” that was $331,760 in 2020 which was higher than the $314,827 for 2019. This new higher loan limit will affect a large portion of the country. Your loan limit is specific to your county, so to look up your new loan limit, click here and select “CY2021” for the Limit Year.

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). This calculation would effectively allow an eligible homebuyer to purchase a home with a sales price of up to $343,792.  With the required 3.5% down payment, that would put them at the new maximum loan limit of $331,760.

If you’re interested in applying for an FHA Loan, you can start here. Not only did the “floor” increase, but in high-cost areas, the FHA national loan limit “ceiling” will also increase to $765,600 from $726,525. Additionally, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $765,600. This amount is 150 percent of the new 2020 national conforming limit of $510,400.

Due to changes in housing prices and the resulting change to FHA’s “floor” and “ceiling” limits, the maximum loan limits for forward mortgages increased in 2,948 counties. There were no areas with a decrease in the maximum loan limits for forward mortgages though they remain unchanged in 286 counties. FHA calculates forward mortgage limits based on median house prices in accordance with the National Housing Act. FHA’s Single Family forward mortgage limits are set by Metropolitan Statistical Area and county.

Loan limits for reverse mortgages are also calculated but these do not vary by MSA or county; instead, a single limit applies to all mortgages, regardless of where they are originated.

Further Reading

We have interesting articles about non-conventional mortgage loans. The basic ones we will recommend to you are: stated income loans, where we discuss if they are currently legal or not, how can you obtain one, and the situation of these loans in California. We are also covering other non-conventional mortgages, such as the ITIN mortgages.

No doc hard money loans and the very similar hard money construction loans.

If you are into conventional mortgages, we suggest you read the following related articles.

We explain the FHA loan requirements completely, with the current limits for this year. We also go through the appraisal guidelines, and moreover we are worried about the peeling paint and why it can be an issue.

Completing forms is necessary, so we also study the number format of an FHA case and how to submit an FHA file, how to complete the form HUD 92900, the form for the FHA notice to the homeowner, and the FHA Financing Addendum.

Regarding special housing programs, I would like to include the FHA Back To Work Program.

Furthermore, there are two conflicting situations that can occur that are the situation of a conditional commitment and the identity of interest.

David Laidler

I am David, economist, originally from Britain, and studied in Germany and Canada. I am now living in the United States. I have a house in Ontario, but I actually never go.  I wrote some books about sovereign debt, and mortgage loans. I am currently retired and dedicate most of my time to fishing. There were many topics in personal finances that have currently changed and other that I have never published before. So now in Business Finance, I found the opportunity to do so. Please let me know in the comments section which are your thoughts. Thank you and have a happy reading.

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