Borrowers of FHA loans can look forward to higher borrowing limits in 2018. The Federal Housing Administration recently announced an increase in FHA loan limits for its insured forward and reverse mortgages in most counties in the U.S. by $18.5K and $43.5K, respectively.
The 2018 FHA loan limits for one-unit homes, for instance, now range from $294,515 to $679,650. Senior homeowners with reverse mortgages can claim up to $679,650.
2018 FHA Loan Limits
For FHA forward mortgage loans that closed starting or after Jan. 1, their nationwide mortgage limits are bigger:
- The standard (floor) loan limit has increased to $294,515, from $275,665. This is applicable to 2,655 counties classified as low-cost in the U.S.
- The ceiling loan limit has jumped to $679,650, from $636,150. This is applicable to 75 counties deemed as high-cost because of their more expensive homes.
- There are 502 counties whose FHA loan limits are between the floor and the ceiling.
Tally of counties: FHA/HUD
For example, you plan to buy a home in a low-cost area next year. These will be your prevailing FHA loan limits:
- One-unit property – $294,515
- Two-unit property – $377,075
- Three-unit property – $455,800
- Four-unit property – $566,425
In high-cost areas, one must take out a larger loan to buy a median-priced home. Effective 2018, the following FHA mortgage limits will apply:
- One-unit property – $679,650
- Two-unit property – $870,225
- Three-unit property – $1,051,875
- Four-unit property – $1,307,175
The loan ceiling apparently is not enough for the high construction costs in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Thus, these special exception areas are allowed to have limits higher than the ceiling:
- One-unit property – $1,019,475
- Two-unit property – $1,305,325
- Three-unit property – $1,577,800
- Four-unit property – $1,960,750
To find your county limit, this site can help.
2018 HECM Loan Limits
The FHA insures reverse mortgages known as Home Equity Conversion Mortgages or HECMs. And for 2018, the loan limit on HECMs will have also increased.
A homeowner aged 62 or older can have a maximum claim amount of $679,650, up from $636,150 in 2017.
This single HECM loan limit is for all counties in the U.S. including the special exception areas.
FHA and FHFA
2018 FHA loan limits are aligned with conforming loan limits set by the Federal Housing Finance Agency for Fannie Mae and Freddie Mac loans. The FHFA earlier raised 2018 conforming loan limits to reflect higher home prices.
For instance, the FHA floor limit of $294,515 is 65% of the baseline conforming limit of $453,100. Likewise, the FHA ceiling is 150% of $453,100 or $679,650.
FHA loans that closed at the start of 2018 or thereafter will benefit from the new, higher loan limits.
Indeed, FHA’s higher borrowing limits for forward mortgages and maximum claim amount limits for reverse mortgages add to reasons why FHA loans are popular. They have lenient guidelines with respect to credit scores, credit histories and debt-to-income ratios, plus their down payment is as low as 3.5%!Click to See the Latest Mortgage Rates»