FHA Loan Limit Increase for 2019

December 27, 2018 By , ,

The FHA Announces New Loan Limits for 2019

Starting in 2019, the New Year will bring higher loan limits to loans insured by the Federal Housing Administration (FHA). FHA mortgage loan limits will increase by approximately 7%, mirroring the rise for conforming loans.

The new limit will be $314,827 from $294,515 for a single unit home in most of the nation, but for some high-cost areas, it rises to $726,525 from $679,650.

For a list of loan limits across the country, visit HUD.gov.

FHA Loan Limit Increase 2019 | Pacific Residential Mortgage

Note that these FHA loan limits are just 65% of conforming loan (Fannie Mae and Freddie Mac) loan limits. So if you need to spend more in a low-cost area, consider conventional (non-government) home loans.

FHA Loan Limits and Reverse Mortgages

FHA-insured Home Equity Conversion Mortgages (HECMs), also known as reverse mortgages, got a bump in limits, too.

The FHA raised the limits on HECMs to $726,525 from $679,650. This increase is 150% of the loan limits for both Fannie Mae and Freddie Mac, which will rise to $484,350 in 2019.

“FHA’s current regulations implementing the National Housing Act’s HECM limits do not allow loan limits for reverse mortgages to vary by MSA or county; instead, the single limit applies to all mortgages regardless of where the property is located,” according to a statement by the FHA.

How Higher 2019 FHA Mortgage Limits Benefit You

Increased loan limits, whether conforming, VA, or FHA, put more power into the consumers’ hands. It also allows those who already own a home to take more cash out of their home’s equity. For many, FHA mortgages offer an opportunity for homeownership that would otherwise be unavailable. FHA loans are lenient in comparison to many other loan types. For example, credit score minimums are often lower than a conventional mortgage.

FHA mortgages are also flexible about down payments, gift funds can be used for a range of costs, and can still be useful for those with high debt-to-income ratios.

So, if you need the flexibility of FHA financing, but want to spend more on a house, these latest increases are good news.

Should You Consider Conventional Financing?

For strong borrowers with great credit, and/or substantial down payments, conventional (a.k.a. conforming) home loans may be a better option for you.

It pays to check with both programs and to discuss both options with your mortgage banker to decide which mortgage option will save you the most money in the short and long term. That’s easy; you can contact a mortgage banker here.

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