The Federal Housing Administration (FHA) announced new loan limits for 2024 this week, bumping up the “floor” on FHA loans to $498,257.
This represents a 5.56% increase from the current 2023 FHA loan limit of $472,030, which is based on home price movement over the past year.
There is also a ceiling loan limit for FHA loans for high-cost areas, which was increased to $1,149,825 from $1,089,300.
Together, this should boost access to the FHA’s low-down-payment home loan program at a time when affordability has rarely been worse.
FHA loans comes with various perks, whether it’s a cheaper mortgage rate or a lower minimum required credit score.
2024 FHA Low-Cost Area Floor Loan Limits
One-unit property: $498,257
Two-unit property: $637,950
Three-unit property: $771,125
Four-unit property: $958,350
For 2024, the low-cost area “floor” FHA loan limit will be $498,257 for a one-unit property.
It will rise as high as $958,350 for a four-unit property in these low-cost areas, which includes metros like Chicago, Tampa, and Tucson, Arizona.
The floor is set at 65% of the 2024 conforming loan limit, which also announced an increase to $766,550 this week.
It applies to areas of the country where 115 percent of the median home price is less than the floor limit.
Given the large difference in maximum loan amounts, roughly $250,000, it could sway the decision to choose a conventional loan instead of an FHA loan.
For example, if buying a $525,000 home with 3.5% down, you’d be forced to go with a conventional loan in these low-cost areas.
Or you’d need to come in with a larger down payment to make the numbers work.
You can search the FHA loan limits by state and county here to see where your area stands.
2024 High-Cost Area Ceiling Loan Limits
One-unit property: $1,149,825
Two-unit property: $1,472,250
Three-unit property: $1,779,525
Four-unit property: $2,211,600
Similar to the conforming loan limits for Fannie Mae and Freddie Mac-backed loans, there are high-cost loan limits for FHA loans.
These can vary based on the respective median home price in each area, but will be somewhere above the floor to as high as the ceiling.
Speaking of, that ceiling is a hefty $1,149,825 for a one-unit property, which sounds like quite a lot for an affordable home loan option. But I digress.
Some areas between the floor and ceiling include Atlanta ($649,750), Austin ($571,550), Boston ($862,500), Nashville ($943,000), Philadelphia ($557,750), and Phoenix ($530,150).
As you can see, there is quite a range in maximum loan limits, so those buying a particularly expensive property may not qualify for an FHA loan.
Cities at the ceiling include pricier places like Heber, UT, Jackson, WY, Los Angeles, New York City, San Francisco, and Washington D.C.
The FHA noted that maximum loan limits will increase in 3,138 counties in 2024, with 96 county loan limits remaining unchanged.
These new mortgage loan limits are effective for FHA case numbers assigned on or after January 1, 2024.
Ceiling in Special Designated Areas Even Higher
One-unit property: $1,724,725
Two-unit property: $2,208,375
Three-unit property: $2,669,275
Four-unit property: $3,317,400
Last but not least, the ceiling in specially designated areas including Alaska, Hawaii, Guam, and the U.S. Virgin Islands will be even higher.
And even I say higher, I mean way higher. We’re talking maximum loan amounts ranging from $1.7 million to over $3.3 million.
This is to account for higher construction costs in these regions, those with limits this high, I wonder how many home buyers are actually getting anywhere close.
Again, FHA loans are typically reserved for lower-income buyers, so it’s a bit of a head scratcher.
But this is just how the math formula works, prescribed by the National Housing Act.
Along with this announcement, the HECM (FHA reverse mortgage) maximum claim amount will increase from $1,089,300 in calendar year 2023 to $1,149,825 as of 2024.
Note that if home prices happen to fall in 2024, theses loan limits won’t decrease. They’d merely stay unchanged.