No, it’s not the number of times you have seen the same holiday movie on the Hallmark Channel. It’s not the number of emails you have received promising the “best deals of the season!”
It’s the number of counties in the US that are seeing a somewhat dramatic increase in FHA loan limits. That is significant considering in 2016 only 188 counties saw an increase in limits.
Under federal law, the FHA is required to set single-family loan limits subject to a floor and a ceiling. The FHA calculates mortgage limits by Metropolitan Statistical Area (MSA) and county using the median home prices for those areas. In lower cost areas the FHA national mortgage limits are $314,827 for one unit up to $605,525 for a four unit. The higher cost area mortgage limits are $726,525 for one unit up to $1,397,400 for a four unit.
That seems simple enough, but completely understanding the limits is not that easy. It gets a little confusing — you need to know the limits almost county by county.
FHA’s 2019 minimum national loan limit (or floor) — which actually ends up being the most you can borrow under FHA programs in many areas, making it seem like more of a ceiling than a floor — is set at 65% of the national conforming loan limit of $484,350 or $314,827 for a single family residence. This floor applies to those areas where 115% of the median home price is less than the floor limit. Any areas where the calculated loan limit exceeds this floor are considered high-cost areas, and in those instances FHA sets its maximum loan limit “ceiling” for high-cost areas at 150% of the national conforming limit or $726,525 for 2019.
Pretty much clear as mud — and we haven’t considered multi-unit limits.
Fortunately, both the FHA and Federal Housing Finance Agency (which calculates the conforming Fannie and Freddie loan limits) have online tools to help you identify these limits by state and county. You can find links below.
So relax and enjoy the holiday, watch that Hallmark Channel movie, or try to unsubscribe from that “season’s best deal” email for the 3054th time. These higher loan limits will allow more potential homeowners to get the financing they need in 2019.