HUD Announces 2025 Loan Limits
Industry Update
November 26, 2024
Source: U.S. Department of Housing and Urban Development
The U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) is announcing new loan limits for calendar year 2025 for its Single Family Title II forward and Home Equity Conversion Mortgage (HECM) mortgage insurance programs. Loan limits for most of the country will increase in the coming year due to the continued appreciation of home prices over the past year.
FHA must update its annual loan limits each year using a formula prescribed in the National Housing Act (NHA). This formula uses county or Metropolitan Statistical Area (MSA) home sale data to derive new loan limits for the three cost categories established by the law. The NHA requires FHA to establish its floor and ceiling loan limits based on the national conforming loan limit set by the Federal Housing Finance Agency (FHFA) for conventional mortgages owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). This floor applies to those areas where 115 percent of the median home price is less than the floor limit. Any area where the loan limit exceeds this floor is considered a high-cost area. In these areas, FHA establishes varying loan limits above the floor based on the respective median home prices in each area. The NHA requires FHA to set its maximum loan limit ceiling for a one-unit property for high-cost areas at 150 percent of the national conforming loan limit. Forward mortgage limits for the special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands are adjusted further by FHA to account for higher costs of construction.
“Today’s announcement of loan limit increases, calculated according to statute, enables the FHA program to keep up with nationwide price appreciation,” said Federal Housing Commissioner Julia Gordon. “Regular adjustment of loan limits ensures that FHA financing continues to be available in all markets to all those who rely on our programs to access homeownership.”
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