The Federal Housing Administration announced plans on Thursday to increase loan limits in 2017, announcing a significant jump in counties set to increase compared to last year.
Due to home price increases, the FHA said that most areas in the country will see a slight increase in loan limits in 2017.
These loan limits are effective for case numbers assigned on or after Jan. 1, 2017, and will remain in effect through the end of the year.
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.
Here are the upcoming changes. In high-cost areas, the FHA national loan limit “ceiling” will increase to $636,150 from $625,500. FHA will also increase its “floor” to $275,665 from $271,050.
Additionally, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $636,150.
The FHA noted that this amount is 150% of the national conforming limit of $424,100.
The maximum loan limits for forward mortgages increased in 2,948 counties, which is attributed to changes in housing prices and the resulting change to FHA’s “floor” and “ceiling” limits.
There were no areas with a decrease in the maximum loan limits for forward mortgages though they remain unchanged in 286 counties.
This is compared to last year, which increased the loan limits in 188 counties due to changes in housing prices.
As an added note, FHA’s minimum national loan limit “floor” is set at 65% of the national conforming loan limit of $424,100. The FHA said the floor applies to those areas where 115% of the median home price is less than 65% of the national conforming loan limit.
For any area that doesn’t fit this and the loan limit exceeds the “floor,” it’s considered a high cost area. The maximum FHA loan limit “ceiling” for high-cost areas is 150% of the national conforming limit.
Check here for a complete list of FHA loan limits.
The news follows Federal Housing Finance Agency’s recent announcement that it plans to increase the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2017.