2022 FHA loan limits rise by $65,000
FHA loan limits are increasing in 2022. The new baseline limit — which applies to most single-family homes — will be $420,680.
That’s nearly a $65,000 increase over last year’s FHA loan limit of $356,360.
The Federal Housing Administration is raising its lending limits to keep pace with home price inflation.
With these higher limits, borrowers will have access to a wider range of homes using affordable FHA financing.
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What’s the most you can borrow with an FHA loan?
Generally, the most you can borrow with an FHA loan is $420,680. That applies to single-family homes, with limits increasing for 2-, 3-, and 4-unit properties and in higher-cost counties.
The maximum FHA loan amount for a 1-unit property in a high-cost area is $970,800. And for a 4-unit home, it’s nearly $2 million.
Keep in mind that not every borrower will qualify for the maximum FHA loan amount. The most you can borrow will depend on other factors, like your credit score, debt-to-income ratio, and down payment amount.
FHA loan limits for 2022
FHA loan limits dictate the maximum amount you can borrow on an FHA-backed home loan. Starting January 1, 2022, that limit will be $420,680 for a single-family home in most parts of the country.
FHA loan limits are even higher in expensive areas, with single-family loans maxing out at $970,800 in expensive metros.
Single-family (one-unit) FHA loan limits
|AK, HI, Guam, & Virgin Islands||$1,456,200|
According to FHA’s guidelines, a low-cost area is one where you can multiply the median home price by 115% and the product is less than $420,680.
Similarly, a high-cost area is one where the median home price multiplied by 115% is greater than $420,680. In these areas, the ‘ceiling’ for a one-unit home is $970,800.
There are just 65 U.S. counties with home prices high enough to qualify for FHA’s maximum loan limit.
There are also ‘special exception’ loan limits in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, FHA caps single-family home loans at a surprising $1,456,200.
FHA says the higher loan limits in Alaska, Hawaii, Guam, and the Virgin Islands are meant to “account for higher costs of construction.”
FHA multifamily loan limits
The Federal Housing Administration also backs mortgages on 2-, 3-, and 4-unit properties. These types of homes have higher loan limits than single-family residences.
|2-Unit Property||3-Unit Property||4-Unit Property|
|AK, HI, Guam, & Virgin Islands||$1,864,575||$2,253,700||$2,800,900|
Although FHA allows multifamily home loans, the property must still be considered a ‘primary residence.’ That means the homebuyer needs to live in one of the units full time.
In other words, an FHA loan cannot be used to purchase an investment property. However, you can use an FHA mortgage to purchase a 2-4 unit property, live in one unit, and rent out the others.
In this way it’s possible to get a multifamily loan up to $1.9 million with a low-rate FHA loan and just 3.5% down payment.
About the 2022 FHA loan limits
In order to get approved for an FHA loan, your mortgage must be within the maximum loan amount the FHA will insure. Known as “FHA loan limits”, these maximums vary by county.
In 2022, the Department of Housing and Urban Development (HUD) is increasing FHA loan limits in 3,188 counties while just 45 counties will remain the same.
There are four different pricing tiers for FHA loan limits: a standard tier, a mid-range tier, a high-cost tier, and a special exception tier.
In low-cost counties, FHA loan limits are now capped at $420,680 for a single-family home loan.
In high-cost counties, FHA’s single-family loan limit is $970,800.
However, many counties fall in the ‘mid-range’ category with limits somewhere between the floor and ceiling.
You can look up your local FHA loan limits using this search tool.
What is an FHA loan?
The FHA loan is a type of mortgage meant to help lower-income and/or lower-credit buyers become homeowners.
With looser eligibility standards, the FHA program makes it easier to qualify for a mortgage even if your finances aren’t perfect.
Exact rules can vary by mortgage lender. But you can typically qualify for an FHA loan with:
- A credit score of 580 or higher
- A down payment of 3.5% or more
- A debt-to-income ratio of 45% or less
- Stable income and employment
- A 2-year employment history
It’s important to note that the Federal Housing Administration is not a lender. So you wouldn’t go “to” the FHA to get a mortgage loan.
Rather, the FHA insures these mortgages and mainstream lenders offer them. So you could get an FHA loan from most any bank, lender, or credit union.
FHA vs. conforming loan limits
FHA mortgage limits are closely tied to conforming loan limits.
Every year, the Federal Housing Finance Agency (FHFA) updates its home price index. This is used to set both conforming loan limits and FHA loan limits. But the two are calculated differently.
Conforming loans — which follow guidelines set by Fannie Mae and Freddie Mac — have higher loan limits than FHA mortgages.
For example, look at the standard, single-family loan limits for 2022.
- FHA’s standard loan limit is $420,680
- The standard conventional loan limit is $647,200 — a full $226,520 higher than FHA
However, not everyone can qualify for higher loan amounts via a conventional mortgage.
Fannie Mae and Freddie Mac require a minimum credit score of 620 for a conforming loan. And for borrowers with credit on the lower end of the spectrum, they charge higher rates and expensive private mortgage insurance (PMI).
FHA loans are often more attractive for borrowers with fair credit despite having lower loan limits.
It’s possible to qualify for FHA financing with a credit score as low as 580, and a low score won’t force you into a high interest rate.
The FHA does charge its own mortgage insurance premium. But this can be more affordable than conventional loan PMI for borrowers with low credit and a small down payment.
FHA Streamline Refinance loan limits
One perk of having an FHA loan is that you can refinance using the FHA Streamline Refinance program.
The FHA Streamline is a low-doc loan that gives homeowners the ability to refinance without having to verify income, credit, or employment.
When you refinance via the FHA Streamline program, your new loan must be within local FHA loan limits. But this will not be an issue.
Since the FHA Streamline can only be used on an existing FHA loan — and no cash-out is allowed — you won’t be able to increase your loan balance above current FHA mortgage limits.
Other requirements for the FHA Streamline Refinance include:
- You must be making your current mortgage payments on time
- Your current FHA mortgage must be at least 6 months old
- The agency will verify that there’s a financial benefit to your refinance. Known as the Net Tangible Benefit clause, your “combined rate” (interest plus mortgage insurance) must drop by at least 0.5%
If you meet these guidelines, the FHA Streamline is a great way to refinance into today’s ultra-low mortgage rates and lower your monthly payment.
Today’s FHA loan rates
FHA mortgages are riding the low-interest-rate wave. With mortgage rates at historic lows, and loan limits on the rise, it’s an excellent time to consider FHA financing.Check with a lender to see how much home you can afford thanks to 2022 FHA loan limits.