2017 Recap
For 2017, the maximum FHA loan limit in low-cost areas (floor) is $275,665 for a standard, single-unit home. This was increased from 2016’s $271,050.
In high-cost areas (ceiling), the limit is $636,150 for a one-unit property. This was a leap from the $625,500 ceiling for 2016.
The Report
The Federal Housing Administration (FHA) has announced on December 7, 2017 (Thursday) that the FHA loan limits for 2018 will be increased.
This announcement was done weeks after the Federal Housing Finance Agency (FHFA) publicized the higher national conforming loan limits with is expected to take effect next year. Read a related article, click here.
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According to the press release, most areas in the country will have an increase in FHA loan limits for the coming year. More than 3,000 counties will have new loan limit which will take effect on or after January 1, 2018.
The loan limits are adjusted by the FHA as required the National Housing Act “to set Single Family forward loan limits at 115 percent of median house prices, subject to a floor and a ceiling on the limits. FHA calculates forward mortgage limits by Metropolitan Statistical Area and county.”
Low-Cost Area FHA Loan Limits
| Property Size | Loan Limit |
| One-unit | $294,515 |
| Two-unit | $377,075 |
| Three-unit | $455,800 |
| Four-unit | $566,425 |
The new national loan limit floor is 65 percent of FHFA’s new national conforming loan limit of $453,100 for standard one-unit properties.
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High-Cost Area FHA Loan Limits
*Don’t apply for Alaska, Guam, Hawaii and the U.S. Virgin Islands
| Property Size | Loan Limit |
| One-unit | $679,650 |
| Two-unit | $870,225 |
| Three-unit | $1,051,875 |
| Four-unit | $1,307,175 |
Still, the FHA loan limits ceiling in high-cost areas are calculated by considering the national conforming loan limit. Areas including Alaska, Guam, Hawaii and the U.S. Virgin Islands will have special exceptions. Therefore, their loan limits for 2018 will be different and will be higher than the FHA loan limits ceiling. These areas’ FHA loan limits are set even higher due to the very high construction costs associated with them
| Property Size | Loan Limit |
| One-unit | $1,019,475 |
| Two-unit | $1,305,325 |
| Three-unit | $1,577,800 |
| Four-unit | $1,960,750 |
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What Caused the increase?
Over the past months, median housing prices in most areas and counties continued to scale up. FHA saw that the need to change its floor and ceiling loan limits. This is also the main reason why FHFA decided to increase the conforming mortgage loan limit in the coming year.
While 3,011 counties will be enjoying higher loan limits in the coming year, 223 other counties’ FHA loan limits will stay the same. According to the HUD press release, “By statute, the median home price for an MSA is based on the county within the MSA having the highest median price. It has been HUD’s long-standing practice to utilize the highest median price point for any year since the enactment of HERA.”
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To read the Mortgagee Letter 2017-16: 2018 Nationwide Forward Mortgage Limits
What does this Imply?
The said increase in loan limits for next year brings good news to a lot of people who are planning to purchase a house in 2018. More prospective buyers can qualify for FHA financing with the higher FHA loan limits.
To learn more about how the 2018 housing market will fare, talk to a lender. Doing so will help you plan for homeownership in the coming year.
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