The Department of
Housing and Urban Development (HUD) has published its 2021 Forward Mortgage
Limits for FHA loans. The FHA limits are based on the Federal Housing Finance Agency’s
(FHFA’s) conforming limits for Fannie Mae and Freddie Mac loans; however, they
are individualized by locality and cover a much wider range.
HUD sets a floor for the
lowest cost areas and a ceiling for high cost areas. Limits fall within those
two ranges. The agency determines whether an area is considered high cost or
low cost by the median sales price of homes at the county level. Where a
property is inside a Metropolitan Statistical Area (MSA) the county within the MSA with the highest median
price determines the outcome for the entire MSA.
Last week FHFA (not to be confused with FHA) announced
it has raised its 2021 conforming limit by 7.42 percent based on that increase
in its House Price Index from the third quarter of 2019 to the same quarter in
2020. That resulted in a new conforming limit of $548,250. FHA uses that figure to compute its floor
The floor for the lowest-cost areas is set at 65
percent of that conforming limit, or $356,362 for a one-unit property. For high-cost
areas there is a ceiling of $822,375,
150 percent of the FHFA conforming limit. Counties and MSAs have their own
limits within that range.
More expansive limits are
available for multi-unit properties. The floor for a two-unit is $456,275 with
a ceiling of $1,053,000. The range for three-unit buildings is $551,500 to
$1,272,750, and for four units, $685,400 to $1,581,750.
There are also higher limits
for Hawaii, Alaska, Guam, and the U.S. Virgin Islands because of the higher construction
costs in those locations. The 2021 ceiling for a single unit residence in those
areas will be $1,233,550.
A list of all
counties and MSAs with the limits for all types of property can be downloaded here.