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FHA announces 2016 loan limits

Limits will increase in 188 counties

The Federal Housing Administration announced its loan limits for 2016, with the loan limits in 188 counties set to increase due to changes in housing prices.

There will be no decreases to the loan limits in any counties.

Nationally, for areas considered to be “high cost,” including San Francisco, Washington, D.C., New York, and some parts of Los Angeles, the FHA loan limit will remain at the national ceiling, $625,500.

For areas considered to be “low cost,” the FHA loan limit will remain at $271,050.

The FHA recalculates its national loan limit on a yearly basis. The limits are based on a percentage calculation of the nation conforming loan limit.

Depending on those limits, FHA's minimum national loan limit "floor" is set at 65% of the national conforming loan limit. The floor applies to those areas where 115% of the median home price is less than 65% of the national conforming loan limit, the FHA said.

According to the FHA, next year's minimum national loan limit “floor” is set at 65% of the national conforming loan limit of $417,000.

Any area where the loan limit exceeds the “floor” is considered a high cost area.

The maximum FHA national loan limit "ceiling" is at 150% of the national conforming limit.

In areas where 115% of the median home price (of the highest cost county) exceeds 150% of the conforming loan limit, the FHA loan limits remain at 150% of the conforming loan limit, the FHA said.

Click here to see the list of the 188 counties where the FHA’s loan limits will change for 2016.

Additionally, the FHA also announced that the mortgage loan limits for FHA-insured reverse mortgages will remain unchanged in 2016.

The FHA’s reverse mortgage program, called the Home Equity Conversion Mortgage, will continue with a maximum claim amount of $625,500.

The actual loan amounts are determined by property value, borrower age, and current interest rates.

The new loan amounts go into effect on Jan. 1, 2016 and will remain in effect until the end of the year.

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