The Federal Housing Administration (FHA) has announced new loan limits for Single Family Title II forward and Home Equity Conversion Mortgage (HECM) insurance programs in 2023. Effective for FHA case numbers assigned on or after Jan. 1, 2023, the new limits respond to the house price appreciation experienced during the first half of 2022.
“The loan limits announced today reflect steep increases in home prices throughout much of the country and will ensure continued access to FHA-insured mortgage financing despite those increases,” says Julia Gordon, assistant secretary for housing and federal housing commissioner.
The maximum loan limits for FHA forward mortgages will rise in 3,222 counties and will remain the same in 12. The median home price for a Metropolitan Statistical Area (MSA) is based on the county within the MSA with the highest median price. In accordance with the the National Housing Act (NHA), FHA calculates forward mortgage limits by MSA and county.
FHA is required to set single-family forward loan limits at 115% of area median house prices for a particular jurisdiction, which is subject to a specified floor and ceiling based on the national conforming loan limit set by the Federal Housing Finance Agency (FHFA) for conventional mortgages owned or guaranteed by Fannie Mae and Freddie Mac.
Set at 65% of the national conforming loan limit, the low-cost area floor is $472,030 for one-unit properties, which applies where 115% of the median home price is less than the floor limit. Any area where the loan limit exceeds the floor is considered a high-cost area. For one-unit properties, the high-cost area ceiling is $1,089,300, with special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Island’s ceiling at $1,633,950.
Two-unit properties’ low-cost area floor is $604,400, and the high-cost area ceiling is $1,394,775, with special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Island’s ceiling at $2,092,150. Three-unit properties’ low-cost area “floor” is $730,525, and the high-cost area ceiling is $1,685,850, with special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Island’s ceiling at $2,528,775.
For four units, the low-cost area floor is $907,900, and the high-cost area ceiling is $2,095,200, with special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Island’s ceiling at $3,142,800.
Beginning with FHA case numbers assigned on or after Jan. 1, the HECM max claim amount will increase to $1,089,300 compared with $970,800 in the 2022 calendar year. The amount is calculated at 150% of the Freddie Mac and Fannie Mae national conforming limit of $726,200. The maximum claim amount is applicable to all areas including the special exception areas.