FHA Announces New Mortgage Loan limits for 2020
Written By: Joel Palmer, Op-Ed Writer
Mortgage underwriters and processors can offer larger FHA mortgage loans this year.
The Federal Housing Administration (FHA) announced new forward mortgage and reverse mortgage limits for 2020. These new loan limits are effective for case numbers assigned on or after January 1, 2020, through December 31, 2020.
FHA calculates forward mortgage limits based on the median house prices in accordance with the National Housing Act. An increase in the national median home price raised FHA’s floor and ceiling limits for FHA loans.
The 2020 limit for for single family properties will range from $331,760 in low-cost areas to $765,600 in high-cost areas. The low-cost area limit is set at 65 percent of the national conforming limit of $510,400. High-cost area limits are set at 150 percent of the conforming limit.
For two-unit properties, the range will be $424,800 to $980,325. The range for three-unit loans will be $513,450 to $1,184,925. For four-unit properties, it will be $638,100 to $1,472,550.
As in previous years, Alaska, Hawaii, Guam, and the U.S. Virgin Islands have a higher limit ceiling than the rest of the country. Those limits have set at $1,148,400 for one-unit properties; $1,470,475 for two-units; $1,777,375 for three-units; and $2,208,825 for four-units.
With the exception of 11 jurisdictions, all U.S. counties will have an increase in forward loan limits. Changes to the makeup of certain Metropolitan Statistical Areas (MSAs) by the Office of Management and Budget caused a loan limit decrease from 2019 levels in the following 11 areas:
Dutchess County, New York ($726,525 to $370,025)
Orange County, New York ($726,525 to $370,025)
Lincoln County, Idaho ($646,300 to $331,760)
Caroline County, Virginia ($535,900 to $331,760)
Hickman County, Tennessee ($534,750 to $331,760)
Camden County, North Carolina ($726,525 to $458,850)
Buckingham County Virginia ($437,000 to $331,760)
Hood County, Texas ($395,600 to $331,760)
Somervell County Texas ($395,600 to $331,760)
Tyrell County, North Carolina ($391,000 to $331,760)
Sibley County, Minnesota ($366,850 to $331,760)
Loan limits are typically determined by the county in which a property is located. An exception to this rule is for properties located in MSAs defined by the Office of Management and Budget. The limits in these areas are set using the county with the highest median price within the MSA.
The maximum claim amount for FHA-insured HECMs, also known as reverse mortgages, for all areas, including Alaska, Hawaii, Guam, and the U.S. Virgin Islands, will be $765,600 next year. That’s 150 percent of Federal Freddie Mac’s national conforming limit of $510,400.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
