FHA Loan Limits Move Up To A Floor of $356,362

The Department of Housing and Urban Development (HUD) has published its 2021 Forward Mortgage Limits for FHA loans. The FHA limits are based on the Federal Housing Finance Agency's (FHFA's) conforming limits for Fannie Mae and Freddie Mac loans; however, they are individualized by locality and cover a much wider range.

HUD sets a floor for the lowest cost areas and a ceiling for high cost areas. Limits fall within those two ranges. The agency determines whether an area is considered high cost or low cost by the median sales price of homes at the county level. Where a property is inside a Metropolitan Statistical Area (MSA)  the county within the MSA with the highest median price determines the outcome for the entire MSA.

Last week FHFA (not to be confused with FHA) announced it has raised its 2021 conforming limit by 7.42 percent based on that increase in its House Price Index from the third quarter of 2019 to the same quarter in 2020. That resulted in a new conforming limit of $548,250. FHA uses that figure to compute its floor and ceiling.

The floor for the lowest-cost areas is set at 65 percent of that conforming limit, or $356,362 for a one-unit property. For high-cost areas there is a ceiling of  $822,375, 150 percent of the FHFA conforming limit. Counties and MSAs have their own limits within that range.

More expansive limits are available for multi-unit properties. The floor for a two-unit is $456,275 with a ceiling of $1,053,000. The range for three-unit buildings is $551,500 to $1,272,750, and for four units, $685,400 to $1,581,750.

There are also higher limits for Hawaii, Alaska, Guam, and the U.S. Virgin Islands because of the higher construction costs in those locations. The 2021 ceiling for a single unit residence in those areas will be $1,233,550.

A list of all counties and MSAs with the limits for all types of property can be downloaded here.