On December 1, 2016, the Department of Housing and Urban Development (HUD) announced that they would be increasing FHA loan limits for 2017. This change applies to most counties across the country. This means home buyers who use FHA loans will have more financing available, and possibly more properties to choose from as a result.
The FHA loan program is popular among home buyers who have limited funds saved up for a down payment. With this program, eligible borrowers can buy a house with as little as 3.5% down. The qualification criteria are a bit more lenient as well.
Higher FHA Loan Limits in 2017
At the start of December, the Federal Housing Administration (FHA) announced the agency's new schedule of loan limits. Due to an increase in housing prices, most areas in the country will see a slight increase in loan limits in 2017. These loan limits are effective for case numbers assigned on or after January 1, 2017, and will remain in effect through the end of the year.
In high-cost areas, the FHA national loan limit "ceiling" will increase to $636,150 from $625,500. FHA will also increase its "floor" to $275,665 from $271,050. Additionally, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $636,150. This amount is 150 percent of the national conforming limit of $424,100.
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's minimum national loan limit "floor" is set at 65 percent of the national conforming loan limit of $424,100. The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.
Any areas where the loan limit exceeds the "floor" is considered a high cost area. The maximum FHA loan limit "ceiling" for high-cost areas is 150 percent of the national conforming limit. To find a complete list of FHA loan limits, areas at the FHA ceiling, areas between the floor and the ceiling, as well as a list of areas with loan limit increases, visit FHA's Loan Limits Page.
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 (MSA) 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 in the regardless of where they are originated.