The Federal Housing Administration (FHA) has announced the agency’s new schedule of loan limits for 2019, with most areas in the country to experience an increase in loan limits in the coming year. These loan limits are effective for FHA case numbers assigned on or after January 1, 2019.
FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008 (HERA), 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 home loan limits by Metropolitan Statistical Community and county.
In high-cost regions of the country, FHA’s loan limit ceiling will increase to $726,525 from $679,650. FHA’s current regulations implementing the National Housing Act’s HECM limits do not allow loan limits for reverse home loans to vary by MSA or county; instead, the single limit applies to all mortgages regardless of where the property is located.
Due to booming increases in median housing prices and required changes to FHA’s floor and ceiling limits, which are tied to the Federal Housing Finance Agency (FHFA)’s increase in the conventional mortgage loan limit for 2019, the maximum loan limits for FHA forward home loans will rise in 3,053 counties. In 181 counties, FHA’s loan limits will remain unaffected.
The National Housing Act, as amended by HERA, mandates FHA to form its floor and ceiling loan limits based on the loan limit set by FHFA for conventional mortgages owned or guaranteed by Fannie Mae and Freddie Mac. FHA’s 2019 minimum national loan limit, or floor, of $314,827 is set at 65 percent of the national conforming loan limit of $484,350. This floor applies to those communities where 115 percent of the median home price is less than the floor limit.
Any areas where the loan limit exceeds this ‘floor’ is considered a high-cost community, and HERA requires FHA to set its maximum loan limit ‘ceiling’ for high-cost communities at 150 percent ($726,525) of the national conforming limit.