Federal Housing Administration (FHA) loan limits will rise for the vast majority of the country in 2020, according to a new letter from the Department of Housing and Urban Development (HUD).
HUD, which oversees the FHA, calculated 2020’s forward mortgage limits based on the median home prices in accordance with the National Housing Act. Loan limits are determined by county and are set as a percentage of national conforming loan limits, which were announced by the Federal Housing Financial Agency last week.
The FHA loan limit in most of the country for one-unit properties will be $331,760 — 65% of the national conforming loan limit of $510,400. That’s up $16,933 from 2019.
For two-unit properties, the limit is $424,800. Three-unit properties have a limit of $513,450, while four-unit properties have a limit of $638,100.
Note that HUD terms this $331,760 limit the “floor,” since it applies to the lowest-cost tier of counties nationwide. It is, however, the maximum FHA loan amount for each of those counties.
For high-cost areas (about 70 counties across the country), the FHA loan limit for one-unit properties is set at $765,600, or 150% of the national conforming limit. That’s up $39,075 from the FHA loan limit for 2019.
For two-unit properties, that limit in 2020 increases to $980,325; for three-unit properties, it is set at $1,184,925; and for four-unit properties, the limit is $1,472,550. HUD terms this limit the “ceiling,” since it is the upper bound for maximum loan limits nationwide.
Also note that there are a few areas scattered across the map where FHA loan limits are determined differently from the above calculations. Limits for these special exception areas, including Alaska, Hawaii, Guam and the U.S. Virgin Islands, are adjusted by the FHA to account for higher construction costs. For these areas, the one-unit FHA loan limit is $1,148,400. For two units, the limit is set at $1,470,475. For three units, the limit is $1,777,375, and for four units, the limit is $2,208,825.
Not all counties in the U.S. are seeing a loan limit increase, however. Home price changes in 11 counties are dictating that the loan limit next year will decrease. Two of these counties — Dutchess and Orange Counties in New York — are in the New York City metro area, while another two — Hood and Somervell Counties in Texas — are part of the Dallas-Fort Worth Metroplex.