December 26, 2023
FHA loan limits increase in many housing markets in the United States in the new year. Higher FHA loan limits typically reflect the state of the housing market in the last year, and 2024 is no exception. We examine the finer points of FHA loan limits below.
FHA Loan Limits Are Set Once Per Year
Federal law dictates FHA loan limits be established annually using specific types of data to inform the new rates.
The National Housing Act contains the guidelines FHA must use to establish loan limits in the new year. FHA and HUD typically announce these limits in the final weeks of the prior year, sometime between November and the end of December. FHA loan limits are set at 115 percent of the median house prices in a given area.
In rare cases, the FHA may reestablish loan limits in cases where conditions warrant, but this is not typical.
FHA Loan Upper And Lower Limits
There is a low-end limit also known as the “floor”. There is an upper limit called the “ceiling” for FHA loan limits. The annual review of these limits is intended to determine whether any changes are justified.
2024 also brings higher loan limits for FHA Home Equity Conversion Mortgages or HECMs. These loans have a similar review process for setting new limits but there are a few differences. What kind?
FHA reverse mortgage guidelines require FHA reverse mortgage or HECM limits to be established in a different way than for purchase loans. A single FHA reverse mortgage or HECM limit applies to all such transactions, “regardless of where the property is located” according to HUD.gov.
Why FHA Loan Limits Are Higher For 2024
The FHA and HUD say FHA loan limits may increase in your housing market due to house price increases and other market factors.
That was the reason rates moved higher last year. In the new year, prices may be lowering depending on the market, but mortgage rates are still higher than in previous years at press time.
New Loan Limits Take Effect 1 January
The new, higher FHA loan limits for 2024 are offered for loans with FHA case numbers on or after 1 January 2024. No loans with case numbers prior to 1 Jan 2024 qualify.
Not sure how the new FHA loan limits affect your home loan? A good rule of thumb is to look at the calendar date of the FHA case number you were assigned (where applicable.)
If you have an FHA loan case number assigned in the new year, the new loan limits apply to you. If your case number was issued in the previous year, that year’s limit applies.
If you need information on a larger loan than allowed by the FHA loan limit, an FHA Jumbo mortgage may be the option you need. Speak to a participating lender about qualifying for an FHA jumbo loan amount above the FHA loan limit in 2024.
