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FHA Loan Limits for 2022: How Much Can I Qualify For?
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FHA home loans are insured by the Federal Housing Administration (FHA), available through FHA-approved lenders and often considered a primary tool for homebuyers with small down payments or lackluster credit history. For 2022, FHA loan limits on single-family homes are $420,680 — except for some higher-priced areas, in which case the maximum is $970,800.
2022 FHA loan limits
| Number of units | Low-cost area limits | High-cost area limits |
|---|---|---|
| One unit | $420,680 | $970,800 |
| Two units | $538,650 | $1,243,050 |
| Three units | $651,050 | $1,502,475 |
| Four units | $809,150 | $1,867,275 |
FHA loan limits are the maximum amount borrowers could receive when taking out an FHA mortgage. Set by the FHA according to the terms of the National Housing Act, FHA loan limits are based on a percentage of the loan limit amounts set by the Federal Housing Finance Agency (FHFA) for conventional loans, also called conforming loans. Conforming loan limits are owned or guaranteed by Fannie Mae and Freddie Mac and are typically higher than FHA loan limits.
The national conforming loan limit for one-unit properties is $647,200 in 2022. The FHA loan limit “floor” is 65% of the conforming loan limit — or $420,680 — for most counties across the country. The FHA loan max, or “ceiling,” in high-cost areas is $970,800 — this is 150% of the conforming loan limit.
The 2022 FHA loan limits for single-family homes reflect an 18% increase over the 2021 FHA loan limits of $356,362 for most areas and $822,375 in high-cost areas. This increase is due to the changing housing market.
“Housing prices have risen dramatically over the past year, so loan limits must also increase to keep up and provide housing options for more borrowers,” says Andrina Valdes, COO of Cornerstone Home Lending in San Antonio. “For many borrowers, this FHA loan limit increase can be a big help, making it possible for you to afford a bigger home or one in a better location without having much impact on your monthly payment.”
To find the FHA loan limits in your local area, you can talk with a local mortgage loan officer. You can also visit the U.S. Department of Housing and Urban Development’s (HUD) FHA mortgage limits website to search for FHA limits by county or state.
HECM loan limits
The loan limit for an FHA home equity conversion mortgage (HECM) also increased for 2022 and is now $970,800. The only reverse mortgage insured by the federal government, a HECM is only available through FHA-approved lenders and provides a way for senior homeowners to tap their equity and supplement retirement income.
The amount senior homeowners can borrow for a HECM will depend on the youngest borrower’s or eligible non-borrowing spouse’s age, current interest rates and the lesser of the appraised home value, the HECM FHA mortgage limit or the sales price.
What factors affect FHA loan limits?
There are several factors that affect FHA loan limits, but the primary factor is pricing in the housing market and how it changes from year to year. “Both the median home price in a local area, as well as the national conforming loan limits, will impact FHA loan limits,” Valdes says.
When considering the local area for housing, that “area” refers to a metropolitan statistical area (MSA), as defined by the U.S. Office of Management and Budget. Within the MSA, the median home price for the highest-priced county must be used to calculate the loan limit for the entire MSA.
The FHA maximum loan amount also is limited by U.S. statute, which, as previously mentioned, is set at 65% of the conforming loan limit. The highest-possible loan limit is set at 150% of the conforming loan limit.
How to qualify for FHA financing
While an FHA mortgage could be your best option for a home purchase, you must meet several FHA home loan requirements to qualify for FHA financing. While these requirements are similar to those of a conventional mortgage, FHA loan programs may have other restrictions that might not be right for you.
Credit score: You must have a minimum 580 credit score, provided you have a 3.5% down payment. If you have a 10% down payment, you could qualify with a credit score of at least 500.
Income: You must show proof you’ve had consistent income for at least the last two years. FHA guidelines also allow for a co-borrower who doesn’t live with you to help meet income requirements.
DTI ratio: Your debt-to-income (DTI) ratio must be less than 43% of your gross monthly income. In addition, your monthly mortgage payment shouldn’t be more than 31% of your monthly income.
Down payment: Your credit score dictates how much you’ll need to put down on an FHA loan. If your credit score is 580 or higher, you can put down just 3.5%; if your credit score is between 500 and 579, you’ll need a 10% down payment.
Credit history: You may not qualify for an FHA mortgage if you’ve defaulted on a federal loan. Two years must pass in order to qualify after a Chapter 7 bankruptcy discharge; three years must pass after a previous foreclosure.
Employment history: Be prepared to show proof of employment for the last two years. If you have gaps of more than 30 days within that two-year period, you’ll need to provide explanations.
Home appraisal: Your home appraisal must meet FHA appraisal guidelines to show the home provides decent, safe and sanitary housing. Because of this due diligence, an FHA appraisal typically costs more than an appraisal for a conventional loan.
Occupancy: The home you purchase with an FHA loan must be your primary residence for at least one year. If you think you’ll move before the year is up, consider exploring other home financing options.