FHA Increases Loan Limits for 2020
The Federal Housing Administration (FHA) announced increases to their loan limits for the majority of the United States to $331,760 in 2020. The decision was due to another increase in median home price sales during 2019.
The increase in FHA loan limits for 2020 is almost $17,000 higher than the FHA loan limits set for 2019. There are some areas of the country that are considered to be “high cost areas”. Examples are Alameda County CA where San Francisco is located, Bergen County NJ, and Dukes County MA. High cost areas like these have average median home sales much greater than the rest of the United States. As a result, the FHA set the maximum loan limit for high cost areas at $726,525
What does this mean for home buyers?
The increases in FHA loan limits means borrowers may be able to afford a more expensive home with the low-down payment required by the FHA.
What does this mean for home sellers?
For home sellers, it means more home buyers will qualify increasing the competition between those buyers potentially driving up prices a bit. It is always a good thing for the housing market when loan limits are increased.
There are a few exceptions where the ceiling is even higher due to the much higher cost of construction. These areas include Alaska and Hawaii and the limits are set at $1,148,400.
We will see loan limit decreases in 11 counties in 2020 due to declines in average home sale prices in these areas in 2019.
Loan limits go into effect on Jan 1, 2020. The new limits will apply to you if your FHA case number is issued on or after Jan 1, 2020.