FHA loan limit increase matches record home price appreciation

Ninety-nine percent of counties nationwide will start in 2022 with higher Federal Housing Administration (FHA) loan limits than in 2021. Home price appreciation hit record highs in 2021 as the housing market continued to thrive during the pandemic. Increasing FHA loan limits is especially important in an environment of rising home prices, as it helps some Americans get a mortgage by giving buyers lower down payment and credit score options.

• The FHA sets a ceiling and a floor on loan limits each year based on median home prices. The new cap of $ 970,800 is 18% higher than last year’s $ 822,375. Loans in subways like Los Angeles, New York and San Francisco are subject to the revised limit. The new low of $ 420,680 is visible in buzzing housing markets like Las Vegas; Raleigh, North Carolina; and Tampa, Florida. Over 87% of all counties received the minimum limit;
• Among major markets, new loan limits increased the most in Boise, Idaho and Phoenix counties, up 24% and 20%, respectively. Other notable increases include some counties in Montana, Utah, and Tennessee. In some markets, however, the dramatic increase still lags behind the price increase seen over the past year; and
• After a moderate increase of just 2.8% last year, Austin, Texas, one of the hottest housing markets in the country, rose 16%, from $ 416,300 to $ 483,000. This change, however, is still less than the 18% national increase in floor and ceiling limits.

“Home builders and existing homeowners have benefited tremendously from the booming housing market, but those looking to buy a home have found the process difficult,” said Tim Sullivan, senior manager at Zonda. “These higher FHA loan limits capture how the market has evolved and serve as a place to help people with slightly tarnished credit scores or a small down payment move up the property ladder.

The impact on the new housing market varies by metro, but most will see a net benefit.

• The Maricopa County New Home Communities in Phoenix are the biggest winners under the new 2022 criteria, with over 100 additional active communities posting a minimum price below the updated limit of $ 441,600. Maricopa was also the biggest winner in 2020 and 2021;
• At the CBSA level, Houston got the most new home communities that now fall within the new boundaries, Harris and Montgomery counties alone have added 116 more active projects listed under their new limit of 420. $ 680; and
• Among the big metropolises, Las Vegas gained the most in percentage, increasing its number by 130% under FHA. The other large metropolises with large percentage gains were Phoenix; Riverside / San Bernardino, California; Orlando Florida; and Charlotte, North Carolina.

The change in FHA loan limits and limits corresponds to the 18% increase in conform loans announced by the Federal Housing Finance Agency (FHFA) earlier this week. The FHFA has set the national compliance limit at $ 647,200, the FHA is required to set the floor at 65% of the compliance limit while the ceiling is set at 150% of the FHFA figure.