The Federal Housing Administration’s loan limits will generally increase 5% next year, but changes in the composition of statistical areas will lead to decreases in 11 counties.
In most areas, the floor for the FHA’s standard loan-size restriction will be 65% of the standard 2020 conforming limit ($331,760 for single-family mortgages) starting on Jan. 1. This is the lowest limit the FHA can impose on loans it insures.
The majority of high-cost areas will have a maximum single-family loan limit of $765,000 next year.
Alaska, Hawaii, Guam and the U.S. Virgin Islands have a special exemption, and mortgages in those areas will have a higher upper limit of $1,148,400 in 2020.
Decreases related to statistical area changes will affect the following counties: Lincoln in Idaho, Sibley in Minnesota, Dutch and Orange in New York, Camden and Tyrrell in North Carolina, Hickman in Tennessee, Hood and Somervell in Texas, and Buckingham and Caroline in Virginia.
Year-to-year changes in loan limits in these regions will range from negative-10% to negative-51%.
Loan limits are determined by the county a property is located in unless it’s in a statistical area as defined by the Office of Management and Budget.
If a property is located within a statistical area, the limits are set using the county with the highest median home price within that region.
The Federal Housing Administration is part of the Department of Housing and Urban Development and a key source of financing for first-time homebuyers. It is the only government agency that operates from self-generated income, which it receives from mortgage insurance premiums.