Today, the Federal Housing Administration (FHA) is announcing new loan limits for calendar year 2023 for its Single Family Title II forward and Home Equity Conversion Mortgage (HECM) insurance programs. Loan limits for most of the country will increase in the coming year due to house price appreciation during the first half of 2022, which is factored into the statutorily mandated calculations FHA uses to determine the limits each year.
“The loan limits announced today reflect steep increases in home prices throughout much of the country and will ensure continued access to FHA-insured mortgage financing despite those increases,” said Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon.
Forward Mortgage Loan Limits
The new forward mortgage loan limits are effective for FHA case numbers assigned on or after January 1, 2023:
|Property Size||Low-Cost Area “Floor”||High-Cost Area “Ceiling”||Alaska, Hawaii, Guam,|
and U.S. Virgin Islands “Ceiling”1
- Mortgage limits for the special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands are adjusted by FHA to account for higher costs of construction.
The maximum loan limits for FHA forward mortgages will rise in 3,222 counties. In 12 counties, FHA’s loan limits will remain unchanged. By statute, the median home price for a Metropolitan Statistical Area (MSA) is based on the county within the MSA that has the highest median price.
HECM Loan Limits
The HECM maximum claim amount will increase from $970,800 in calendar year 2022 to $1,089,300, effective for FHA case numbers assigned on or after January 1, 2023. This maximum claim amount is applicable to all areas, including the special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands.
Calculation of Loan Limits
FHA is required by the National Housing Act (NHA), as amended by the Housing and Economic Recovery Act of 2008 (HERA), to set Single Family forward mortgage loan limits at 115 percent of area median house prices for a particular jurisdiction, subject to a specified floor and a ceiling. In accordance with the NHA, FHA calculates forward mortgage limits by MSA and county.
The NHA requires FHA to establish its floor and ceiling loan limits based on the national conforming loan limit set by the Federal Housing Finance Agency (FHFA) for conventional mortgages owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
The national conforming loan limit for 2023 for a one-unit property is $726,200. FHA’s 2023 minimum national loan limit floor of $472,030 for a one-unit property is set at 65 percent of the national conforming loan limit. This floor applies to those areas where 115 percent of the median home price is less than the floor limit. Any area where the loan limit exceeds this floor is considered a high-cost area. In these areas, FHA establishes varying loan limits above the floor based upon the respective median home prices in each area.
The NHA requires FHA to set its maximum loan limit ceiling for high-cost areas at $1,089,300, which is 150 percent of the national conforming loan limit. Forward mortgage limits for the special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands are adjusted further by FHA to account for higher costs of construction.
Additionally, the FHA-insured HECM maximum claim amount is calculated at 150 percent of the Freddie Mac national conforming limit of $726,200. FHA’s current HECM regulations do not allow the HECM limit to vary by MSA or county; instead, the single HECM limit applies to all HECMs regardless of where the property is located.
To find a complete list of FHA loan limits, areas at the FHA ceiling, and areas between the floor and the ceiling, visit FHA’s Loan Limits Page.