Taking into account from one year to the next real estate price gains, the Federal Housing Administration (FHA) increases its 2021 loan limit in most of the United States to $ 356,362, an increase of almost $ 25,000 from Loan limit 2020 of $ 331,760.
This loan limit amount is determined as a percentage of the conforming national loan limit for Fannie Mae and Freddie mac, Which one is increasing in 2021 at $ 548,250.
The FHA 2020 national minimum loan limit, or “floor,” of $ 356,362 is 65% of the national compliant loan limit of $ 548,250. This floor applies to low-cost areas, which are counties where 115% of the median home price is below the floor limit.
In about 65 high-cost U.S. counties where the median home price is far above the FHA loan limit floor, the FHA is increasing its loan limit for 2021 to $ 822,375, nearly a huge increase of $ 57,000 of the total of $ 765,600 in 2020.
Since the FHA is required by the National Housing Act – as amended by the Housing and Economic Recovery Act of 2008 – to set the limits on term loans for a single family at 115% of the median price of dwellings, subject to a floor and ceiling on the limits, HERA requires the FHA to set its maximum loan limit “ceiling” for high cost areas to 150% of the national compliance limit.
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“The FHA has seen consistent increases in loan limits over the past several years, which puts it in a position to serve a segment of borrowers that may be better served by the conventional market. The mission of the FHA is to support low to moderate income borrowers, so why does the law allow the FHA to insure mortgages up to $ 822,375? This is a question that Congress and taxpayers who support the FHA must answer, ”said Assistant Housing Secretary and Federal Housing Commissioner Dana Wade.
As part of HERA, the FHA calculates term mortgage limits by metropolitan statistical area and by county. Due to the sharp increase in median house prices and the required changes to the FHA floor and ceiling limits, the maximum loan limits for FHA term mortgages will increase in 3,108 counties. In 125 counties, FHA loan limits will remain unchanged.
There are a number of counties where the 2021 loan limit will be. between the floor and the ceiling. Loan limits in these counties, which are based on median house prices in those counties, range from just above the low of $ 356,362 to just below the high of $ 822,375.
There are also a few areas where loan limits are calculated differently from the rest of the country due to the specific nature of these housing markets.
As in previous years, Alaska, Hawaii, Guam, and the U.S. Virgin Islands have a higher limit cap than the rest of the country to account for higher construction costs.
In these areas, the FHA 2021 loan limit is $ 1,233,550.
Unlike the 2020 report, the FHA said there was no county where loan limits would decrease.
It should also be noted that the floor and ceiling of the FHA loan limit increase on two, three and four unit properties.
According to the FHA, loan limits apply to case numbers assigned from January 1, 2021 through December 31, 2021.