The FHA loan limits were recently updated for 2018.
This is the FHA max loan amount for about 65% of the U.S. the limit increases in certain high cost living areas such as Denver and Los Angeles.
HUD also increased the ceiling loan limit for high costs areas from $625,500, to $636,150 effective January 2017.
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2018 FHA Loan Limits
In 2017 the loan limits in low-cost areas was $275,665, $636,150 in high cost areas.
The new loan limits for 2018 are:
- $294,515 in low-cost areas
- $679,650 in high-cost areas
FHA Loan Limit Special Exceptions
In parts of Guam, Hawaii, U.S. Virgin Islands, and Alaska there are exceptions to the loan limits due to high construction costs.
|# of Units||Guam, Hawaii, Alaska, U.S. Virgin Islands|
Search for the loan limit in your county on the HUD website.
What are FHA Loans?
The Federal Housing Administration was created by the Government to increase homeownership in America. An FHA mortgage is easier to qualify for because they have more flexible guidelines than traditional loans making them a favorite of first-time homebuyers.
The FHA loan program does not issue the loans, they insure them. Private lenders who become an FHA-approved lender issue the loans and the Federal Housing Administration insures the mortgage loan in the event the borrower defaults on the mortgage.
FHA home loans do require mortgage insurance premiums (MIP) which help fund the FHA mortgage program. The mortgage insurance fee is 0.85% of the loan amount. The amount can be lower or higher depending on the amount of down payment and loan amount.
You can qualify for an FHA mortgage with a 500 credit score with a 10% down payment. However, getting approved for a loan with a score in this range is often very difficult. It is recommended that you work on improving your credit score before applying for a mortgage.
If you have a 580 credit score then you will qualify for an FHA mortgage loan with a 3.5% down payment. These loans are great because they allow your down payment to be a gift from a friend or family member. An FHA mortgage also has lower interest rates than conventional loans.
FHA Loan Requirements
- 580 credit score
- minimum 3.5% down payment (find available first time home buyer grants)
- 2 years of stable employment
- 2 years of tax returns and w2’s
- Max DTI ratio of 41%
- Owner occupied buyers only
FHA Loan Benefits
- 3.5% down payment with a 580 credit score
- Low mortgage rates
- High debt-to-income ratio accepted
- Can refinance with an FHA streamline refinance
VA Loan Limit
The VA loan limit is $424,100 with a maximum guarantee amount of $1,00,000 on a jumbo VA loan.
If you need a loan that exceeds the FHA mortgage loan limit in your county, you will need a conventional or a jumbo loan.
Conventional loans are known as conforming loans. Conventional loans in most areas have higher loan limits than FHA loans. As you can see in the chart below, the floor loan limit in low-cost areas is $424,100.
Conforming Loan Limits for Low-Cost Areas
|Units||Contiguous States, DC, and Puerto Rico||Hawaii, U.S. Virgin Islands, Alaska, and Guam|
Conforming Loan Limits for High-Cost Areas
The conventional loan limits for high-cost areas are the same as the FHA loan limits for high-costs areas. If you need a loan for more than the loan limits you will need to apply for a jumbo loan. Jumbo loans and super jumbo loans offer financing up to 3 million dollars with some lenders.
|Units||Contiguous States, District of Columbia+||Hawaii, U.S. Virgin Islands, Alaska, and Guam|