FHA Raises Loan Limits For 2020

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As a result of rising home prices, the Federal Housing Administration (FHA) has raised the baseline conforming loan limit for single-family mortgages in 2020 from the current $314,827 to $331,760, an increase of nearly $17,000.

Loan limits for multifamily properties in low-cost areas have been raised to $434,800 for two-unit properties, $513,450 for three-unit properties and $638,100 for four-unit properties.

For high-cost areas, new multifamily loan limits are $980,325, $1,184,925 and $1,472,550, respectively.

The FHA’s loan limits are based on the limits announced last week by the Federal Housing Finance Agency (FHFA) for loans acquired by Fannie Mae and Freddie Mac.

The limits are calculated based on the annual increase in the FHFA home price index for the third quarter, which was 5.38%.

Using that limit, FHA sets its own limits with a floor and a ceiling. The floor applies to those areas where 115% of the median home price is less than 65% of the base limit for 2020.

In areas where the median home value is 115% or more of the conforming limit, higher prices apply but those are capped at 150% of the base limit, or $765,500.

In between the low-cost limit or floor and the high cost cap, limits are set on a county by county basis or, in some cases are determined by metropolitan statistical area.

The mortgagee letter announcing the new FHA limits did not reference limits for reverse or HECM mortgages.

There’s even a nifty tool for searching the FHA or GSE mortgage limits for one or more areas.

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