FHA loans, a powerful loan program for first-time homebuyers, will increase its limits, the Department of Housing and Urban Development announced.
The agency’s 2021 Forward Mortgage Limits are based on the Federal Housing Finance Agency’s conforming limits, which are individualized based on the needs of each community. For low- and high-cost areas, HUD will set the floor and ceiling for these loans.
Conforming loan limit is a legal restriction on the maximum mortgage loan amount lenders can offer through the FHA loan program.
It is the agency’s responsibility to evaluate areas and determine whether they are high or low cost based on the median sales price of homes at the county level.
The new 2021 conforming limit is up 7.42%, bringing it to $548,250. The floor for the lowest-cost areas is 65% of the amount for a one-unit property. For high-cost areas, the ceiling can reach 150% of the conforming limit.
For areas where it’s more expensive to construct homes, more expansive loan limits will also be available to FHA borrowers.
An FHA loan is insured by the Federal Housing Administration. Its unique features are particularly beneficial to first-time homebuyers. With an FHA loan, borrowers will not need to come up with a large down payment or boast a high credit score.
And with interest rates at historic lows, an FHA loan becomes an even more powerful financial tool.
If you’re thinking about buying a home, please contact us today to learn how an FHA loan’s financial flexibility can get you through today’s market and into the home of your dreams.