FHA Loan Limits Rise In Every County
The Federal Housing Administration (FHA) has released a mortgage loan limit update.
Effective immediately, FHA-insured mortgages are now available for loan sizes up to $679,650 for one-unit homes.
FHA loan limits are higher for 2-unit, 3-unit and 4-unit properties; and for homes in Honolulu, Hawaii and several other Hawaiian cities.
2018 FHA loan limits are higher in nearly every county nationwide, with a new “floor” loan amount of $294,515.
What Is An FHA Loan?
It can be confusing, but the FHA is not actually a mortgage lender. Rather, it’s a mortgage loan insurer. The FHA provides insurance which protects against loss the banks which make “FHA loans”.
The FHA keeps a book of rules and says, “so long as you make loans that follow these requirements, we will insure those loans against loss.”
FHA-backed loans are often easier for which to qualify than their conforming mortgage counterparts, and come with a number of home buyer-friendly characteristics.
As a few examples of the FHA’s buyer-friendly rules:
- FHA mortgages require a downpayment of just 3.5 percent
- FHA loan downpayment monies can be gifted from a family member
- The minimum credit score requirement for an FHA loan is 500
There are other FHA loan perks, too.
For example, FHA loans are assumable. This means that a future buyer of your home can “assume” its existing mortgage at whatever the mortgage rate happens to be.
If today’s mortgage rates are 4% and rates are ten percent when you sell, instead of applying for a new loan, your buyer can assume your existing 4% FHA mortgage rate instead.
Another FHA loan perk is that FHA mortgage rates don’t change with low credit scores, or property type. FHA mortgage rates are the same, no matter whether your score is a 740 or a 580; or, whether you live in a single-family home or a 4-unit.
Everyone gets access to the same FHA mortgage rates.
2018 FHA Loan Limits By County
In order to get approved for an FHA loan, your loan size must be within the maximums of what the FHA will insure.
Known as “FHA loan limits”, these maximums vary by area, based on local median home values; and, by property type.
FHA loan limits throughout Mississippi and Alabama, for example, are lower than FHA loan limits in the Bay Area of California; and, in Los Angeles and Orange County.
And FHA loan limits on a 2-unit home are higher than the limits on a condo.
There are four tiers of FHA loan limit pricing. There’s a standard tier, a mid-range tier, a high-cost tier, and a special exception tier. The majority of the United States is “standard tier”.
For 1-unit homes — properties which include single-family detached homes, townhomes, row homes, condominiums, and co-ops — FHA loan limits now begin at $294,515.
Look up your local FHA loan limits here.
Standard 2018 FHA Loan Limits
- 1-unit home : $294,515
- 2-unit home : $294,515
- 3-unit home : $294,515
- 4-unit home : $294,515
Standard FHA loan limits, like all loan limits, are based on a mathematical formula.
The “floor”, which governs FHA loan limits in more than 80 percent of U.S. counties, is equal to 65% exactly of the conforming loan limit of $453,100.
It’s used in cities where you can multiply the median home price by 1.15% and the product is less than $294,515.
Mid-Range 2018 FHA Loan Limits
- 1-unit home : From $294,515 to $679,650
- 2-unit home : From $294,515 to $870,225
- 3-unit home : From $294,515 to $1,051,875
- 4-unit home : From $294,515 to $1,307,175
Mid-range FHA loan limits apply to cities where you can multiply the median home price by 1.15% and get a product greater than $294,515. Whatever that product is, so long as it’s less than $679,650, is the local FHA loan limit.
Areas in which mid-range FHA loan limits apply include Cincinnati, Ohio; Philadelphia, Pennsylvania; Minneapolis/St Paul, Minnesota; and Boston, Massachusetts.
High-Cost 2018 FHA Loan Limits
- 1-unit home : $679,650
- 2-unit home : $870,225
- 3-unit home : $1,051,875
- 4-unit home : $1,307,175
High-cost FHA loan limits are the maximum insurable FHA loan size — sometimes called the “ceiling”.
High-cost areas are areas in which the median home price multiplied by 1.15% is greater than $679,650. There are approximately 80 of them nationwide.
High-cost areas include Washington, D.C. suburbs Loudoun County, Virginia; and Bethesda and Potomac, Maryland; as well as San Jose, California; and the entire New York City metro area.
Special Exceptions 2018 FHA Loan Limits
- 1-unit home : $1,019,475
- 2-unit home : $1,305,325
- 3-unit home : $1,577,800
- 4-unit home : $1,960,750
The FHA grants “special exception” loan limits for certain parts of Hawaii, Alaska, Guam, and the U.S. Virgin Islands. The elevated loan limits are designed to offset higher construction costs in these states and territories.
Verify your FHA loan program eligibility (Mar 6th, 2018)
FHA Streamline Refinance: Not Subject To Standard Loan Limits
Among the biggest benefits of using an FHA-backed mortgage is access the agency’s designated home loan refinance program – -the FHA Streamline Refinance.
The FHA Streamline Refinance is available to homeowners with an existing FHA mortgage only. It gives homeowners the ability to refinance without having to verify income, credit, or employment.
The FHA Streamline Refinance has three main qualification standards.
First, in order to get qualified, you have to be making your current mortgage payments on time.
The Federal Housing Administration does not extend the FHA Streamline Refinance to homeowners who are behind in their payments, or who have a history of falling behind on the payments.
The FHA wants to see that your last 3 mortgage payments have been paid on-time, and that you’ve been late on payments no more than one time in the last 12 months.
Second, your current FHA mortgage must be at least 6 months old.
The FHA will verify that you’ve made at least six payments on your current mortgage before allowing you to use the FHA Streamline Refinance program. Once you’ve made six payments, you’ve cleared this hurdle.
And, third, the agency will verify that there’s a “benefit” to your refinance.
Known as the Net Tangible Benefit clause, your mortgage payment must reduce 5 percent or more in order to be FHA Streamline Refinance-eligible.
If you meet these requirements, the standard FHA loan limits will not apply.
Homeowners using the FHA Streamline Refinance get access to elevated FHA loan limits if their current FHA loan amount is above 2018 limits.
For example, a homeowner purchased a home with an FHA loan in 2013 when the FHA loan “ceiling” was $729,750. The borrower can get an FHA streamline loan at $700,000 even though current limits stand at $679,650.
The FHA Streamline Refinance is among the FHA’s most popular programs.
What Are Today’s Mortgage Rates?
The 2018 FHA loan limits apply to all loans beginning January 1, 2018.
Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.