Loan Limits Increased to Keep Up with Appreciation

Due to the drastic increase in real estate prices over the last year, the Federal Housing Administration (FHA) has announced new loan limits for 2022 for its Single Family Title II forward and Home Equity Conversion Mortgage insurance programs. 

The agency is statutorily mandated by the National Housing Act and the Housing and Economic Recovery Act of 2008 to reevaluate loan limits on a yearly basis to ensure that limits remain within current housing market conditions. The current limit for Single Family forward mortgages is 115% of area median housing prices. 

“The NHA requires FHA to establish its floor and ceiling loan limits based on the loan limit set by the Federal Housing Finance Agency (FHFA) for conventional mortgages owned or guaranteed by Fannie Mae and Freddie Mac,” the FHA said. “The national conforming loan limit for 2022 is $647,200. FHA’s 2022 minimum national loan limit “floor”, of $420,680 is set at 65% of the national conforming loan limit. This ‘floor’ applies to those areas where 115% 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, and the NHA requires FHA to set its maximum loan limit ‘ceiling’ for high-cost areas at $970,800, which is 150 percent of the national conforming loan limit.” 

“Due to robust increases in median housing prices and required changes to FHA’s floor and ceiling limits, which are tied to the FHFA’s increase in the conventional mortgage loan limit for 2022, the maximum loan limits for FHA forward mortgages will rise in 3,188 counties. In 45 counties, FHA’s loan limits will remain unchanged. By statute, the median home price for a Metropolitan Statistical Area (MSA) is based on the county within the MSA which has the highest median price.” 

In addition, the maximum claim amount for a FHA-insured reverse mortgage increased from by 18% from $822,375 to $970,800; these limits are nationwide and do not depend on where the borrower lives, unlike the Single Family Title II forward. 

The new loan limits are effective for FHA case numbers assigned on or after January 1, 2022.