December 10, 2012
Recently the FHA announced the new maximum loan limits for 2013. These limits are normally revised annually, but sometimes changes in the law may cause the limits to be recalculated depending on the new regulations put into place. The FHA limits published for 2013 are in effect for the entire calendar year from 1 January 2013 to 31 December 2013 unless otherwise changed by law.
According to the FHA official site, maximum loan limits are developed as follows:
“The statutory provisions of the National Housing Act establish the maximum loan limits and mortgage amounts for all FHA mortgage insurance programs. Maximum loan limits vary depending upon the
• specific program under which a loan is insured
• number of dwelling units in the property (one to four units), and • geographic location of the property.
Under most programs, the maximum insurable mortgage is the lesser of
- the statutory loan limit for the area, or
- a percentage of the lesser of the appraised value or sales price.
One important detail to note is that the FHA sets the maximum limits by property type–the limits on a four-unit property aren’t the same as a single-unit home. Since most borrowers reading this are likely interested in single-family homes, this paragraph from the FHA loan rulebook is important to know with regard to how the FHA sets its single-family loan limits:
“FHA’s single family mortgage limits are set by county and are tied to increases in the loan limits established by the Federal Home Loan Mortgage Corporation (Freddie Mac) in accordance with Section 203(b)(2)(A) of the National Housing Act, as amended by 12 U.S.C.17091.
Under Section 203(b), the nationwide basic mortgage limits (the floor) may not
• exceed 150 percent of the Freddie Mac national loan limit, or
• be less than 65 percent of the dollar amount limitation of Freddie Mac.”
In addition to these guidelines, FHA loan limits are governed by the loan-to-value ratio. According to FHA/HUD regulations found in HUD 4155.1, “A mortgage that is to be insured by FHA cannot exceed a certain percentage of property value. The maximum LTV ratios vary depending upon the
• type of borrower
• type of transaction (purchase or refinance), and
• stage of construction.”
For more information on FHA loan limits, speak to a loan officer or visit FHA.gov.
Do you have questions on FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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