Due to rising home prices, the Federal Housing Administration announced it will increase its loan limits in 2017.
Most areas of the country will see a “slight increase” in loan limits next year, according to an FHA news release. The new loan limits will take effect Jan 1.
In high-cost areas, the FHA national loan limit “ceiling” will increase from $625,500 to $636,150, and the agency will increase its “floor” from $271,050 to $275,665. The maximum claim amount for FHA-insured Home Equity Conversion Mortgages, or reverse mortgages, will increase to $636,150, which is 150% of the national conforming limit of $424,100, the release stated.
Because of changes in housing prices and the resulting change to FHA’s “floor” and “ceiling” limits, the maximum loan limits for forward mortgages will increase in 2,948 counties, according to the release. No counties will see a decrease in their maximum loan limits for forward mortgages in 2017, though they will remain unchanged in 286 counties.
The FHA’s announcement followed news that the Federal Housing Finance Agency would increase the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2017 for the first time in a decade, according to a Dec. 1 HousingWire article.
Housing industry officials expressed hope the increase in the loan limits could lead to additional mortgage origination activity.
“It’s marginal at a macro level in a $1.4 trillion run-rate market,” Mortgage Bankers Association CEO David Stevens said in a Dec. 1 article in National Mortgage News. “But it is impactful on the margin to those individuals who are now in the range.”
FHA calculates forward mortgage limits based on median house prices in accordance with the National Housing Act. FHA’s single family forward mortgage limits are set by Metropolitan Statistical Area and county. Loan limits for reverse mortgages also are calculated in accordance with the act but do not vary by MSA or county, according to the FHA news release.
A complete list of FHA loan limits for 2017 can be found on the FHA’s Loan Limits Page.