HousingWireHousingWire
The Federal Housing Administration (FHA) is increasing the “floor” and “ceiling” FHA loan limits in 2025 to $524,225 and $1,209,750, respectively, the agency announced Tuesday.
The new FHA loan limits apply to forward mortgages for a one-unit property and take effect on Jan. 1, according to the publication of FHA Mortgagee Letter (ML) 2024-21. In 2024, those figures were $498,257 and $1,149,825, respectively.
The new FHA loan limits mark increases of $25,968 for the floor and $59,925 for the ceiling, respectively.
FHA Commissioner Julia Gordon said that these changes in the loan limits will necessarily keep pace with increases in home prices in the coming year.
“Today’s announcement of loan limit increases, calculated according to statute, enables the FHA program to keep up with nationwide price appreciation,” Gordon said. “Regular adjustment of loan limits ensures that FHA financing continues to be available in all markets to all those who rely on our programs to access homeownership.”
While home-price appreciation slowed slightly in 2024, prices still went up nationally according to the Federal Housing Finance Agency (FHFA)’s third quarter 2024 Housing Price Index (HPI) report, also published on Tuesday.
Home prices increased by an average of 4.3% between the third quarters of 2023 and 2024, according to the FHFA report. This growth rate is slightly lower than 2023’s 5.5%, but much lower than the rate seen during the same period in 2022 (12.3%).
“FHA must update its annual loan limits each year using a formula prescribed in the National Housing Act (NHA),” the agency said in its announcement of the new limits. “This formula uses county or Metropolitan Statistical Area (MSA) home sale data to derive new loan limits for the three cost categories established by the law.”
As of Tuesday afternoon, individual county limits on FHA’s database are not yet updated.
The FHA national low-cost area mortgage limits are 65% of the national conforming limit of $806,500 for a one-unit property. The high-cost area mortgage limits are 150% of the national conforming limit, according to FHA.
There are some exceptions. Mortgage limits for special areas, including the states and territories of Alaska, Hawaii, Guam and the U.S. Virgin Islands account for higher construction costs. The ceiling rate for these areas is $1,814,625 for a one-unit property in 2025.
FHA also announced the national lending limit for government-backed reverse mortgages, known as the Home Equity Conversion Mortgage (HECM) program, on Tuesday. HECM loan limits were increased for the ninth consecutive year in a row to $1,209,750 in 2025.
Meanwhile, the FHFA also announced on Tuesday that conforming loan limits will increase to $806,500 in 2025.
