The Federal Housing Administration (FHA) and Federal Housing Financing Agency (FHFA) announced their new loan limits for 2024.
The FHA announced limits for 2024 for its Single Family Title II forward and Home Equity Conversion Mortgage (HECM) insurance programs while the FHFA announced conforming loan limit values (CLL) for mortgages Fannie Mae and Freddie Mac will acquire in 2024.
The FHA says loan limits for most of the country will increase in the coming year due to continued strong home price appreciation. Similarly, the FHFA says the 2024 CLL value for one-unit properties in most of the country will be $766,550, an increase of $40,350 from 2023. The CELL values will be higher in all but five U.S. counties or county equivalents in 2024.
The FHFA is required to adjust the baseline CLL value each year to reflect the change in average U.S. home price. According to the FHFA’s third quarter 2023 FHFA House Price Index, house prices increased 5.56% on a year-over-year basis. As a result, the baseline CLL in 2024 will increase by the same percentage. For areas in which 115% of the local median home value exceeds the baseline CLL value, the applicable loan limit will be higher than the baseline loan limit. The new ceiling loan limit for one-unit properties will be $1,149,825, which is 150% of $766,550.
“The announcement of new loan limits is highly anticipated every year. The focus on this data has only grown thanks to the wild home price appreciation over the past few years,” says Zonda chief economist Ali Wolf. “The new loan limits rose again for 2024 in an effort to keep up with home prices. While higher loan limits don’t help people save for a down payment or pay down debt any faster—two big hurdles to homeownership—they do help buyers get access to loans.”
The FHA is required by the National Housing Act (NHA) to set single family forward mortgage loan limits at 115% of area median house prices for a particular jurisdiction, subject to a specified floor and ceiling. The calculations uses county or metropolitan statistical areas (MSA) home sale data to derive new loan limits for three different cost categories established by the law. The NHA requires the FHA to establish its floor and ceiling loan limits based on the conforming loan limit set by the FHFA.
“The statutory loan limit increases announced today reflect the continued rise in home prices seen throughout most of the nation in 2023,” says assistant secretary for housing and the Federal Housing Commissioner Julia Gordon. “The increases to FHA’s loan limits will enable home buyers to use FHA’s low-down-payment financing to access homeownership at a time when a lack of affordability threatens to shut well qualified borrowers out of the market.”
The maximum loan limits for FHA forward mortgages will rise in 3,138 counties while the loan limits will remain unchanged in 98 counties.
FHA’s 2024 minimum national loan limit floor of $498,357 for a one-unit property is set at 65% of the national conforming loan limit ($766,550). The floor applies to 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.” In high-cost areas, the FHA establishes varying loan limits above the floor based upon the respective median home price in each area. The maximum loan limit ceiling for high-cost areas is $1,149,825, which is 150% of the national conforming loan limit. Forward mortgage limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands are adjusted further by the FHA to account for higher costs of construction.
Two-unit properties’ low-cost area floor is $637,950 and the high-cost area ceiling is $1,472,250, with special exception areas of Alaska, Hawaii, Guam, the U.S. Virgin Island’s ceiling at $2,208,375. Three-unit properties’ low-cost area floor is $771,125, and the high-cost area ceiling is $1,685,850, with the special exception areas’ ceiling at $2,669,275.
For properties with four units, the low-cost area floor is $958,350, the high-cost area ceiling is $2,211,600, and the special exception areas of Alaska, Hawaii, Guam, the U.S. Virgin Islands have a ceiling of $3,317,400.
Beginning with FHA case numbers assigned on or after Jan. 1, the HECM maximum claim amount will increase to $1,149,825 from $1,089,300. The maximum claim amount is applicable to all areas, including the special exception areas.
