BARRISTER'S BRIEFING: 2017 Will Bring New FHA Loan Limits

On December 1, 2016 the Federal Housing Administration announced their new schedule of loan limits for 2017. The newly increased limits apply to most areas of the nation as a result of an increase in housing prices over the past calendar year. In those areas deemed by FHA to be “high-cost areas,” the FHA national loan limit “ceiling” will increase to $636,150 up from $625,500 the year prior. In addition, FHA will also increase its “floor” to $275,665 up from $271,050 in 2016.

It should be noted that all counties in the HGAR service area (Westchester, Rockland, Orange, Putnam, as well as Manhattan {New York} and the Bronx) will have their ceilings increased to $636,150 in 2017.

Additionally, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $636,150. This amount is 150% of the national conforming limit of $424,100. Due to changes in housing prices and the resulting change to FHA’s “floor” and “ceiling” limits, the maximum loan limits for forward (i.e. non-reverse) mortgages increased in 2,948 counties. There were no areas with a decrease in the maximum loan limits for forward mortgages, though they remain unchanged in 286 counties.

FHA’s minimum national loan limit “floor” is set at 65% of the national conforming loan limit of $424,100. The floor applies to those areas where 115% of the median home price is less than 65% of the national conforming loan limit. Any area where the loan limit exceeds the “floor” is considered a high cost area. The maximum FHA loan limit “ceiling” for high-cost areas is 150% of the national conforming limit.

Mortgage limits are calculated by FHA based on median home prices according to the National Housing Act. Mortgage limits specific to single-family homes are set by Metropolitan Statistical Area and county. With respect to reverse mortgages, a single limit applies to all areas regardless of Metropolitan Statistical Area or county.

For Realtors inquiring as to whether the markets they service are in “high-cost” or “low-cost” areas (as categorized by FHA), they may go online at https://entp.hud.gov/idapp/html/hicostlook.cfm and type in the location and the appropriate limit year to obtain the latest mortgage information for any county in the United States. Realtors, and all Licensees, are not expected to be mortgage experts and should defer mortgage qualification issues to the proper professionals. Happy Holidays.

Editor’s Note: The foregoing is for information purposes only and does not confer an attorney/client relationship. For a legal opinion or advice specific to your situation, please consult with a private attorney at law.

Leon Cameron, Esq.
Leon Cameron, Esq., is Director of Legal Services & Professional Standards Administrator for the Hudson Gateway Association of Realtors.