How FHA County Loan Limits Affect Home Buying

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The U.S. Department of Housing and Urban Development (HUD) establishes FHA county loan limits to limit their liability and exposure, ensure that each loan can be backed and foster growth in certain areas. The FHA county loan limits will govern the maximum amount of the loan a person can take out on a property located within that particular county. Some counties will have higher limits than others, based on a variety of factors including the current state of the county and its housing market. 

What are the FHA County Loan Limits?

The good thing about the loan limits is that they are relative. Before 2008’s Economic Stimulus Act, the maximum loan amount could only be 95 percent of the median home price in the area. As a result of the stimulus act, the maximum amount is 125 percent of the median home price in an area. Originally meant to revert to lower rates at the beginning of 2009, the rates were extended for the remainder of the year and will remain the same for 2010. Where homes are more expensive, there is a higher loan limit. Where homes are less expensive, there is a lower loan limit. In areas where growth is needed, a higher loan limit is in place to entice people to relocate to the area. 

What is the Nationwide Loan Limit?

As a result of the economic stimulus, the nationwide maximum loan amount is $729,750. This limit is aimed to help those who live in higher priced areas such as California and Florida and are facing rate adjustments. 

How to Find the FHA County Loan Limits in Your Area

If you are interested in getting an FHA loan to buy a home, the local lenders in your area will be able to provide you with the information about the limits in your area. Once you have information about the limit in your county of choice, you will be able to start house shopping a little easier because you will know the maximum limit of what you can borrow and how this relates to what you can afford.

If you are just curious and doing a bit of preliminary research before talking to a real estate agent or loan officer, the FHA county loan limits are indexed online via the HUD website. You can search by state, county, and city to determine the limits in the local area.

This tool will show limits for single family, two family, three and four family dwellings for the area along with the year they are valid and when the amounts were last updated. This tool is particularly helpful for those who are looking to relocate to an area where they do not know a county name, or want to look at a particular region to see what counties have the best markets in terms of housing and loan limits.