FHA recently announced a new schedule of mortgage loan limits for 2019, effective for case numbers assigned on or after January 1, 2019. As a result, most areas of the country will experience an increase in loan limits for affected loans.
For calendar year 2019, as explained further below, in high cost areas of the country, FHA’s loan limit ceiling will increase to $726,525 (from $679,650). FHA’s loan floor also will increase to $314,827 (from $294,515).
Similarly, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $726,525 (from $679,650). However, because FHA’s current regulations implementing the National Housing Act’s HECM limits do not permit variation in loan limits for reverse mortgages by Metropolitan Statistical Area (MSA) or county, the single limit, instead, applies to all such mortgages, regardless where the property is located.
FHA’s floor and ceiling limits are tied to the increase by the Federal Housing Finance Agency (FHFA) in the conventional mortgage loan limits for 2019. FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008 (HERA), to set single-family forward mortgage loan limits at 115% of median house prices, subject to a floor and ceiling on the limits. FHA calculates forward mortgage limits by MSA and county.
FHA is required by the National Housing Act (as amended by HERA) to establish its floor and ceiling loan limits based on the loan limit set by FHFA for conventional mortgages owned or guaranteed by Fannie Mae and Freddie Mac. The national conforming limit is $484,350 for a one-unit property. Thus, FHA’s 2019 minimum national loan limit, or floor, as noted above, is $314,827 (65% of the national conforming limit), and applies to those areas where 115% of the median price is less than the floor limit. HERA requires FHA to set its maximum loan limit, or ceiling, for high cost areas (i.e., areas in which the loan limit exceeds the “floor”) at 150% (here, $726,525) of the national conforming limit. Certain special exception areas have a higher ceiling.
The maximum loan limits for FHA forward mortgages therefore will rise in over three thousand counties. In 181 counties, FHA’s loan limits will remain the same.
HUD’s press release is available here.
Mortgagee Letter 2018-11 (regarding 2019 Nationwide Forward Mortgage Limits) is available here.
Mortgagee Letter 2018-12 (regarding 2019 Nationwide HECM Limits) is available here.