Thanks to increases in home prices in 2019, the Federal Housing Administration loan limit will increase for nearly all of the country in 2020.
According to an announcement from the FHA, the 2020 FHA loan limit for most of the country will be $331,760, an increase of nearly $17,000 over 2019’s loan limit of $314,827.
That loan limit applies to much of the country, with the figure determined as a percentage of the national conforming loan limit for Fannie Mae and Freddie Mac, which is increasing in 2020 to $510,400 from $484,350.
FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008, to set single-family forward loan limits at 115% 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.
FHA’s 2020 minimum national loan limit, or “floor,” of $331,760 is 65% of the national conforming loan limit of $510,400. This floor applies to “low-cost areas,” which are counties where 115% of the median home price is less than the floor limit.
However, the loan limits are even more in selected higher-cost U.S. areas, and those loans can be conforming clear up to $765,600.
Housing and Economic Recovery Act (HERA) establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a ceiling of 150 percent of the baseline loan limit. Median home values generally increased in high-cost areas in 2019, driving up many maximum loan limits. The new ceiling loan limit for one-unit properties in most high-cost areas will be $765,600 – 150 percent of $510,400.
Special statutory provisions also establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $765,600 for one-unit properties.