What are the FHA loan limits for 2021?
The Federal Housing Administration (FHA) sets new loan limits each year for the mortgages it backs — you know these as FHA loans.
Why the ever-changing limits? The FHA adjusts the amount it will insure based on local housing prices. FHA loan limits are pegged to 115% of the median home price in a given area, and they’re usually set according to county.
For 2021, FHA loan limits range from $356,362 to $822,375 for a single-family home and higher (sometimes much higher) for 2-4 unit homes.
It’s important to realize, though, that FHA loan limits vary based on where you’re buying. We break down what you need to know about FHA loan limits in 2021 and how to find the limits in your area.
What's in this Article?
Who sets the FHA loan limits?
FHA loan limits are set annually by the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development (HUD).
The FHA sets loan limits at 115% of the median home price in an area. The FHA’s maximum loan amount — known as the ceiling — for a single-family home in 2021 is $822,375. The “floor,” or lowest loan limit, is $356,362.
Keep in mind that there is no minimum FHA loan amount. These figures refer to the maximum you can borrow in a given area.
And one more note, FHA has designated “Special Exception Areas,” namely Alaska, Hawaii, Guam, and the Virgin Islands. These limits are set to 150% of the “ceiling” limits. A one-unit home in these areas can be financed up to $1,233,562.
FHA loans aren’t the only mortgages with limits. The Federal Housing Finance Agency (FHFA) sets limits for conventional mortgages, which are backed by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. These are known as conforming loan limits.
For 2021, the conforming loan limits range between $548,250 and $822,375.
If you want to buy a single-family home for more than $822,375, you’ll need to consider a jumbo loan. These are offered by private lenders and are not backed by the government, which makes them higher risk. Lenders may charge higher interest rates and require higher credit scores and bigger down payments for a jumbo loan.
Both FHA and conforming loan limits vary by area. Be sure to check the limits wherever you plan to buy. You can find the FHA loan limits in your county through the HUD search tool.
FHA sets higher limits if you want to buy a duplex, triplex, or four-plex. You can buy a 2-, 3-, or 4-unit home with FHA if you live in one unit. You are free to rent out remaining units.
FHA limits for multi-unit homes are quite high. For instance, the standard limit across the U.S. for a 4-unit home is $685,400.
Limits go up from there. A 2-unit home in Los Angeles County, Calif., allows for an FHA loan of $1,053,000, and you can get a loan of over $1.5 million on a 4-unit (assuming you qualify, of course).
But a truly amazing limit comes in Alaska and Hawaii, where an FHA loan on a 4-unit home maxes out at $2,372,625.
FHA loan limits table
How can I find the FHA maximum loan amount in my county?
Knowing the maximum loan limit in your area tells you something about your local real estate market, since those numbers correlate to housing prices. But as you’ll see in the next section, how much a lender will approve you for depends on a lot more than local loan limits.
To look up the FHA’s maximum loan amount in different U.S. counties, check out the FHA mortgage limits search tool on HUD.gov. Choose “county” in the top drop-down menu and choose your state from the second drop-down menu. Then type the name of your county. Make sure Limit Type is “FHA Forward” and Limit Year is set to “CY2021” and hit Send.
FHA county loan limits can vary significantly even within a state. In California’s San Francisco County, for example, the maximum loan amount is $822,375. But several hundred miles to the north, in Humboldt County, the FHA maximum loan amount is $356,500.
The loan limits that apply to you may change based on real estate prices in the different towns and cities where you’re house-hunting.
Are FHA limits talking about home price or loan amount?
FHA limits refer to the loan amount, not the purchase price of the home.
So if you were buying a $1 million home in an area with a $600,000 FHA loan limit, you could get an FHA loan by putting down $400,000.
However, if you had this big a down payment, you might opt for a conventional loan which requires no mortgage insurance when putting down at least 20%.
But the example illustrates that there are no FHA home price limits, only loan amount limits.
What if I’m over FHA loan limits?
Let’s look at an example of a buyer in Humboldt County, Calif., where the maximum FHA loan amount is $356,500.
The buyer is interested in a $400,000 home. Putting 3.5% down (the minimum down payment for FHA), the loan amount comes to $386,000. This is $29,500 over the limit.
The buyer can:
- Make an additional down payment of $29,500 to get her loan amount down to local FHA limits
- Receive gift funds for the difference
- Opt for a 3% or 5% down conventional loan, which has a limit of $548,250 in this area. She would have to have a credit score above 620 for this option, and may incur higher rates and mortgage insurance depending on credit score
- Get a second mortgage for the amount over the local FHA loan limit ($29,500 in this case). The applicant would have to qualify for the second payment, and would need to make a down payment of 3.5% of the purchase price.
It’s not very common to be over FHA loan limits, but it does happen. Fortunately, there are workarounds if you’re creative.
Who can get an FHA loan?
FHA loans are designed to make homebuying affordable for moderate- to low-income borrowers, so they have more flexible requirements than conventional loans.
There are no income limits or geographic requirements, though a lender will use your credit score, income, and debts to make sure you can afford a mortgage.
To get approved for an FHA loan, you’ll need the following criteria:
- Credit score: 580 or higher
- Down payment: 3.5%
- Debt-to-income ratio (DTI): 50% and sometimes higher
Some lenders may even accept a credit score of 500-579 with a 10% down payment, but not all.
The home you want to buy must also meet FHA guidelines. Borrowers can use an FHA loan to buy a single-family home or a multifamily property with up to four units.
The property must pass an appraisal with an FHA-approved appraiser, who will determine the value of the property and whether it meets the FHA’s livability standards.
How to qualify for an FHA loan
To qualify for an FHA loan, you’ll need to apply with an FHA-approved lender.
Although FHA guidelines are more flexible than those for conventional loans, there are several steps you can take to boost your chances of approval.
- Check your credit score. The minimum credit score for an FHA loan with a 3.5% down payment is 580.
- Figure out how much down payment you can afford. You’ll need a 3.5% down payment to qualify for an FHA loan if your credit score is 580 or higher. If it’s between 500 and 579, you’ll need to put down 10% and find a lender that allows credit scores that low..
- Check 2021 FHA loan limits in your area. Loan approval will depend on your financial circumstances, but knowing the loan limits can set realistic expectations for how much you might be able to borrow.
- Review your employment history. Most lenders require two years of steady employment to approve a loan, although FHA is more lenient in most cases. Organize documents such as pay stubs and tax forms so your lender can verify your employment.
- Calculate your debt-to-income ratio. FHA lenders generally require that your total monthly debts (which include your estimated mortgage payment plus other debt obligations) are less than 50% of your gross (pretax) monthly income.
- Get preapproved with an FHA lender. Prequalification lets you know if the bank will approve you for a loan and gives you an idea of how much house you can afford.
Once you’ve been preapproved for an FHA loan, you can start looking for houses and make an offer once you find one you love. The home will need to pass an appraisal by an FHA-approved appraiser before the lender can give full approval to the loan.
FHA loan limits FAQs
The FHA’s maximum loan amount (the ceiling) is $822,375 in 2021, up from $765,600 in 2020. The FHA’s floor for 2021 is $356,362, a significant jump from the 2020 floor of $331,760. The increases reflect rising home prices in many areas of the country. In Alaska, Guam, Hawaii, and the Virgin Islands, the one-unit FHA loan limit is $1,233,562.
The maximum amount you can borrow on an FHA loan for a single-family home in 2021 is $822,375 ($1,233,562 in Alaska, Hawaii, Guam, and the Virgin Islands). Loan limits are higher for 2-4 unit properties, and the limits in any given county vary based on the median home prices in the area.
FHA loan limits vary based on where you live, and they can even be very different county to county, but your limit is at least $356,362, possibly higher. You can look up the FHA county loan limits in your area using this HUD search tool.
You’ll need a credit score of 580 or above to qualify for an FHA loan with a 3.5% down payment. If your credit score is 500 to 579, you may be able to qualify, but you’ll need a 10% down payment. The house itself must also pass an appraisal for soundness and safety. Your lender will arrange the appraisal with an FHA-approved appraiser.
The FHA does not lend money directly. It’s a government agency that insures loans offered by FHA-approved lenders.
FHA-approved lenders can deny a mortgage application if:
•The price exceeds loan limits
•The borrower does not meet their credit and income qualifications
•The home does not meet FHA property standards for soundness and safety
FHA-approved lenders look for the following qualifications when you apply for the loan. Falling short of any of these may disqualify you.
•Credit scores of 580 and up for a 3.5% down payment
•Credit score between 500 and 579 for a 10% down payment.
•Home price within the FHA loan limits for the area (you can find FHA loan limits here)
•Two-year work history
•A DTI not exceeding 50%. Some lenders require a DTI of no more than 43%.
Lenders can also add their own qualifications on top of the FHA guidelines, and some have more lenient criteria. It helps to apply with several FHA-approved lenders, especially if you have a spotty credit history. Speaking with a few qualified lenders can help you find one that is willing to give you a loan.
The loan amount must fall within FHA loan limits to receive approval. The maximum allowed loan on a single-family home with an FHA loan is $822,375 in 2021 for high-cost areas, and as low as $356,362 in standard areas. Many counties fall in between these limits.
If you want to buy a single-family property for more than the loan limit in your area, you’ll need to consider a conventional mortgage or jumbo loan, or come up with the difference in cash.
The house must also meet FHA property requirements for safety and soundness, based on appraisal from an FHA-approved appraiser.
Yes, you can, as long as the home price is within the allowed loan limits and the house meets FHA property standards. If the house does not meet standards, you can apply for an FHA 203k loan, which allows you to finance repair costs into your loan amount.
You may find it easier to qualify for an FHA loan than a conventional mortgage, especially if you have a spotty credit history. FHA loans have more flexible lending requirements, including lower credit score minimums and a higher debt-to-income allowance than you might find on other loans.
But you must meet both FHA and lender credit, income, and down payment criteria to qualify. The home must also meet the FHA’s property standards.
No. Roughly 83% of FHA homebuyers are first-time buyers, but FHA loans are not restricted to folks buying their first home.
I’m ready to apply
FHA loan limits tell you how much lenders are allowed to lend to FHA borrowers in their areas. But qualifying for an FHA loan — or any mortgage, for that matter — is much more personal than that.
Lenders are primarily concerned with whether you can afford a mortgage and how likely you are to pay it back. If you’re not sure whether you’ll qualify for an FHA loan but you’re ready to buy a home, the best thing you can do is ask.
By getting preapproved with a lender, you find out how much you can borrow and what types of houses you might soon be able to call a home.
Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA, and were not approved by a government agency.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.