What to Remember About FHA Loan Limits
September 4, 2025
FHA loan limits are an important part of the FHA single-family home loan program. Did you know there are higher limits offered for borrowers buying multi-unit homes?
These home loan limits can be confusing because they change each year and vary by location. The Department of Housing and Urban Development (HUD) sets these limits to reflect local market conditions. Understanding the limits in your area is key to making an informed decision about buying there.
What is an FHA loan limit?
The FHA loan limit is the maximum dollar amount that the Federal Housing Administration will insure for a home loan in a specific county. This is not the maximum price of a house a person can buy, but the maximum amount a person can borrow with an FHA-insured loan.
Why do FHA loan limits exist?
The FHA insures loans to protect lenders from losses if a borrower defaults. The loan limits help the FHA manage its financial risk by capping the size of the loans it backs.
What happens if a house costs more than the FHA loan limit?
A buyer can still purchase the home. However, the loan amount cannot exceed the county's FHA limit. The buyer must pay the difference between the sales price and the loan limit in cash as part of the down payment.
Why are the loan limits different in different counties?
Housing costs vary greatly across the country. The FHA sets county-specific limits to ensure its program is useful in both low-cost and high-cost areas. A single national limit would be too high for some markets and too low for others.
How often do FHA loan limits change?
The limits are calculated and set for every county each year.
How does the FHA determine the loan limit for a specific county?
The limit for a county is set at 115 percent of that county's median home sale price from the previous year. However, this amount cannot be lower than a national "floor" or higher than a national "ceiling."
What are the FHA loan limit "floor" and "ceiling"?
The floor is the lowest possible FHA loan limit for any county, applied in standard-cost areas. The ceiling is the highest possible FHA loan limit, applied in designated high-cost areas. Both are calculated each year as a percentage of the national conforming loan limit.
What is a "conforming loan limit"?
This is the national loan limit for Fannie Mae and Freddie Mac. The FHA uses this limit as a baseline to calculate its own nationwide loan limit floor and ceiling each year.
Are there exceptions to the standard loan limit ceiling?
Yes. Alaska, Hawaii, Guam, and the U.S. Virgin Islands are permitted to have a higher ceiling due to unique construction and housing costs.
Are loan limits different for multi-unit properties?
Yes. The FHA sets higher loan limits for properties with two, three, or four separate units. The limit increases with each additional unit.
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