FHA Loan Limits: What They Are and Why They Matter

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ByChristopher Boston
Edited byBenjamar Gabawa

Updated: October 24, 2023

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An FHA loan is a mortgage insured by the Federal Housing Administration, making it easier for more people to become homeowners. An important aspect to consider is FHA loan limits, which cap the amount you can borrow. These can vary by location and are updated annually. Knowing about them helps you narrow down your housing options and plan your finances better. We'll outline everything you need to know about how these limits are set and why they should matter to you. Remember, the more you understand FHA loan limits, the better choices you'll make when looking for a home loan.

What Are FHA Loan Limits?

FHA loan limits are the maximum amounts you can borrow through an FHA loan. The federal government sets these to help maintain a stable housing market and ensure you only borrow what you can handle. You'll hear two key terms: "floor" and "ceiling" limits — the floor is the lowest loan limit available, and the ceiling is the highest. These can vary by county and state, so what's available in one area might be different in another.

FHA loan limits are updated yearly, and that's something you should keep an eye on. If limits go up, you might be able to afford a more expensive home. However, if they go down, you'll need to adjust your home-buying expectations. Knowing the limits helps you make smarter choices for your financial future.

Importance of FHA Loan Limits

FHA loan limits serve as a safety net, helping you borrow only what you can realistically pay back. Exceeding these limits is a risk that could lead to higher monthly payments and financial strain down the line.

When you stick to FHA max loan limits, you align your loan application with the lender's comfort zone. Lenders prefer government-insured loans like FHA because there's less risk involved. That makes them more willing to approve your loan application, streamlining your process. It's not just about quick approval, though. Meeting the set limits also means you're likely to get more favorable loan terms, such as lower interest rates, which could save you money over the life of your mortgage.

FHA loan limits can also have a direct impact on your housing options. For example, if you're eyeing a high-priced neighborhood, but the FHA loan limits won't cover the home prices, you may need to look at different areas or consider different mortgage types. It can help you make a more informed choice, aligning your dream home with financial realities.

Lastly, being aware of these loan limits can give you a feel of the housing market. When limits go up, it often reflects rising home prices. It can help you strategize and determine whether now is a good time to buy or if waiting might be more advantageous. That kind of market understanding can be a valuable asset in your home-buying toolkit.

FHA Loan Limits for 2023

The 2023 FHA loan limits have seen an uptick compared to last year. For one-unit properties, the floor limit has gone from $420,680 in 2022 to $472,030 in 2023. The ceiling limit has also risen from $970,800 to $1,089,300. These changes could mean various things, like a general increase in home prices or a more robust housing market.

It's worth noting that these figures change if you're considering multi-unit properties. To get a clearer idea, check out our detailed table that breaks down how these limits vary based on property size.


Source: FHA loan limits

So, what does this increase mean for you? If you're looking to buy a home, you now have more wiggle room with what you can afford. You can aim for a slightly more expensive property or enjoy lower monthly payments on a home near the limit last year. Either way, understanding the 2023 FHA loan limits puts you in a better position to make an informed choice.


Staying updated on FHA loan limits is a smart move since it can help you plan for the future. For example, if you're saving for a down payment, knowing next year's limits could help you set a realistic savings goal. It can also alert you to economic trends — if loan limits are going up, that often means home prices are, too.

An annual FHA or HUD website check is an excellent place to start. Bookmarking these sites can make things easier. Subscribing to a relevant newsletter is another way to get notifications about changes in your inbox. Remember to watch economic trends that could affect future loan limits. A little bit of knowledge can go a long way in making sound financial decisions.

How Are FHA Loan Limits Determined?

The Federal Housing Administration (FHA) plays a big role in setting FHA loan limits and understanding how it’s done can give you an edge. The FHA reviews housing prices nationwide and sets limits based on those figures. For instance, in low-cost areas, the FHA loan limit might be calculated as a certain percentage of the median home price, while in high-cost areas, the limit could be higher.

Knowing these calculations can help you plan your next move better. If you're eyeing a particular area to live in, understanding how its cost of living impacts FHA loan limits can guide your choices and help you set a budget.

Now, these limits can differ from county to county and state to state. They're reviewed annually, so you might find that the loan limit in your desired area could increase next year, making that dream home more attainable. Keeping an eye on these updates allows you to adapt your plans and make the most informed decisions possible.

Factors Affecting FHA Loan Limits

Knowing the factors that go into setting FHA loan limits can help you become a savvier homebuyer. You can use this information to better gauge market conditions and make more informed choices. So, what are these key factors?

  • Inflation: Rising prices can push home costs up, leading to higher FHA loan limits. Staying informed about inflation rates can give you a good idea of where loan limits might be headed.

  • Housing demand: High demand often means higher prices. If more people want to buy homes in an area, the FHA may raise the loan limits to help more buyers enter the market.

  • Legislative changes or governmental policy shifts: Laws and policies can influence loan limits. For instance, a new housing bill might increase the loan limits to make homes more affordable.

  • Mortgage industry trends: If current mortgage rates are low, more people might be looking to buy, leading to potential adjustments in FHA loan limits.

  • Broader financial market conditions: Economic indicators like stock market performance can impact housing prices and, by extension, loan limits. A thriving economy might result in higher limits.

Some states also have specific regulations or caps that can affect your loan. Always check local guidelines in addition to federal FHA loan limits. By understanding these factors, you can better anticipate changes and plan your homebuying strategy accordingly.

How to Find Your Area’s FHA Loan Limits

Remember that FHA loan limits are not one-size-fits-all — they vary by county and state. Not knowing your area's limit could lead to missed opportunities or even hold up your loan application. For accurate and current numbers, HUD offers an online tool that allows you to check the FHA loan limits in your specific area. You can also contact local FHA-approved lenders for information tailored to your locale.

Real estate agents and community financial centers can also be a treasure trove of valuable insights. They can help you gauge local market conditions and know how to stretch your dollar within the FHA loan limits. Using all these resources sets you up to make well-informed homebuying decisions.

How Much Can I Borrow With My FHA Loan?

Understanding your financial situation starts with figuring out how much you can borrow within the FHA max loan limits. To narrow down a number that works for you, several factors come into play:

  • Credit score: While FHA loans are known for accommodating lower credit scores, a higher number could potentially lower your interest rate. That means you could afford to borrow more within the FHA max loan limits while keeping your monthly payments manageable.

  • Down payment: A down payment serves as your initial investment in your home. The more you can put down, the less you'll need to borrow. For FHA loans, a common down payment is around 3.5%. However, if you can afford to put down more, you'll likely reduce your loan amount and monthly payments.

  • Additional costs: Costs like closing fees, property taxes and mortgage insurance are usually not rolled into your FHA loan amount. Understanding these extra costs helps you better assess the total amount you'll need to complete the home purchase. Planning for these can keep you from overshooting the loan limit in your area.

  • Debt-to-income ratio (DTI): This ratio is a critical metric for lenders. A lower DTI suggests that you have a good balance between debt and income and can make you more appealing to lenders. It could possibly allow you to borrow closer to the upper loan limit without causing concern about your ability to repay.

Knowing these factors can give you a clearer picture of how much you can responsibly borrow. Tools like loan calculators are widely available online to help you estimate potential loan amounts based on these variables. Feel free to use them as a starting point in your homebuying journey.

Financing Properties Exceeding FHA Loan Limits

Navigating the financial landscape of buying a home can sometimes lead you to a crossroads, especially when discovering that the home you're eyeing exceeds FHA loan limits. Let's explore the implications of stepping over that boundary:


If you're looking to stay within FHA loan limits, consider a piggyback loan. It involves taking out a smaller second mortgage alongside your primary loan to cover the extra cost, helping you skirt FHA limits. You can also think about making a larger down payment, effectively reducing your loan amount. Some borrowers might even qualify for loan exceptions, which are rare but possible avenues to explore with your lender.

If an FHA loan doesn't align with your property goals, alternative loan types like conventional loans or jumbo loans might better suit your needs for more expensive properties.

Frequently Asked Questions About FHA Loan Limits

Most borrowers considering FHA loans aren’t aware of its limits. To bridge that gap, we’ve answered some commonly asked questions so you can find the information you need, all in one place.

FHA loan limits are the maximum amounts the Federal Housing Administration will insure for a home loan. These limits are set annually and can differ depending on the location and property type.

FHA loan limits are generally lower than conventional loan limits. While any government entity does not back conventional loans, FHA loans are, and the government sets these caps to manage risk.

Loan limits vary by location to accommodate the varying living costs and average home prices across states and counties. Areas with a higher cost of living will usually have higher FHA loan limits.

Factors such as inflation, housing demand, legislative changes, mortgage industry trends and broader financial market conditions can all contribute to adjustments in FHA loan limits.

The maximum varies by area and property type, but for a single-unit property in 2023, the ceiling is $1,089,300.

FHA loan limits are usually reviewed and updated annually, often reflecting economic conditions and housing market trends.

You can check the HUD website, which offers an online tool for this purpose. Alternatively, you can consult with local FHA-approved lenders.

Yes, staying within the FHA loan limits could get you a loan with lower interest rates, affecting your monthly payments.

Consider piggyback loans, making a larger down payment or applying for loan exceptions. Alternative loan types like conventional or jumbo loans are also options.

There is no official minimum, but lenders might have their criteria, often influenced by state laws and other factors.


About Christopher Boston

Christopher Boston headshot

Christopher (Croix) Boston was the Head of Loans content at MoneyGeek, with over five years of experience researching higher education, mortgage and personal loans.

Boston has a bachelor's degree from the Seattle Pacific University. They pride themselves in using their skills and experience to create quality content that helps people save and spend efficiently.

  • U.S. Department of Housing and Urban Development. "FHA INFO 2022-101." Accessed August 23, 2023.
  • U.S. Department of Housing and Urban Development. "FHA Mortgagee Limits." Accessed October 8, 2023.