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FHA Loan Limits: How Much Can You Borrow In 2021?

Ashley Kilroy3-minute read

October 26, 2021

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There are a dozen and one things to think about before you buy a house. From researching the neighborhood to maintaining your credit to picking out the wallpaper – the list is endless. But one of the most important considerations is how to finance it all.

FHA loans offer an accessible mortgage to a wider range of people. They’re less restrictive than traditional alternatives, making it easier for people who struggle to get approval. But the amount you can borrow depends on the year and where you live. If you’re interested in an FHA loan, then you need to know the FHA loan limits for 2021. Let’s take a look at them.

How FHA Loan Limits Work

Not every future homeowner can find easy financing or qualify for a conventional loan. An FHA loan is a mortgage that is backed by the Federal Housing Administration, which operates under the Department of Housing and Urban Development. The FHA also insures these loans, meaning they protect your lender from loss in the case that you default on the loan.

Generally, FHA loans appeal to first-time home buyers and people with less than desirable credit since they offer low down payments and accept people with lower credit scores. However, you are required to pay mortgage insurance for them.

In addition, FHA loans come with maximum loan limits that cap how much you can borrow. The FHA uses two crucial factors to determine these limits: the property’s location (a low-cost area versus a high-cost area) and the type of property (single-family or multi-family).

While both FHA and conventional loans have limits, they are different. During 2021, conventional loans for a one-unit family home have a $548,250 limit in the lower 48 states. Alaska, Hawaii and high-cost areas have a loan limit of $822,375.

The FHA’s low-cost area limits are set at 65% of the nation’s conforming limit for a one-unit property and 150% of the nation’s conforming cap for high-cost areas. That’s a low of $356,362 and a high of $822,375, respectively, for a one-family unit.

FHA Loan Limits 2021

New loan limits are set on FHA loans every year. For the year 2021, the maximum FHA loan amount for high-cost metropolitan areas sits at $822,375, or drops as low as $356,362 in areas with lower housing costs. The limit applicable to you will depend on where your property is located.

In December 2020, the Department of Housing and Urban Development (HUD) announced that most U.S. counties would receive increases to their FHA loan limits. The Federal Housing Administration raised the loan limits in multiple counties due to the increase in home value nationwide. Although, there are some areas where limits remain the same.

FHA Maximum Loan Amounts In 2021

Below you will find the FHA loan limits for the 2021 year broken down into low-cost and high-cost areas. They are as follows:

FHA Maximum Loan Amounts

1-Unit Homes

2-Unit Homes

3-Unit Homes

4-Unit Homes

Low-Cost Areas

High-Cost Areas

Low-Cost Areas

High-Cost Areas

Low-Cost Areas

High-Cost Areas

Low-Cost Areas

High-Cost Areas

$356,362

$822,375

$456,275

$1,053,000

$551,500

$1,272,750

$685,400

$1,581,750

 

Keep in mind, though: There are also “special exception” areas with higher construction costs. As a result, they have a higher FHA loan limit ceiling as well during 2021. These areas (Alaska, Hawaii, Guam and the Virgin Islands) have the following maximum limits:

 

  • 1-Unit Home: $1,233,550
  • 2-Unit Home: $1,579,500
  • 3-Unit Home: $1,909,125
  • 4-Unit Home: $2,372,625

Great news! Rates are still low in 2021.

Missed your chance for historically low mortgage rates in 2020? Act now!

How To Find Your County’s FHA Loan Limits

While there are common limits, your own FHA loan limit may be different. That’s because FHA loan limits are set based on county property values, so they vary by location. To find the ceiling and floor in your county, you can search for it using HUD’s FHA mortgage limits page.

Can You Contest FHA Loan Limits?

According to the FHA, you can appeal an FHA loan limit in your area. Because the FHA reviews the loan limits at the end of each calendar year, you can make an appeal before the start of each new calendar year.

To contest your local FHA loan limit, you must e-mail the request to Answers@HUD.gov with the subject line of the year you want to appeal. For example, an appeal applied to the year 2021 requires the subject line: 2021 Loan Limits Appeal. However, requests will only be considered for specific areas where HUD lacks data on home sales transactions, per HUD.  

The Bottom Line

The FHA loan limits vary between counties. Every year, the FHA reviews the limits and updates them if needed based on the Home Price Index (HPI). So, 2021 saw its own FHA loan limit changes to accommodate the recent spike in home prices.

Every potential home buyer should know the limits they have to work with in their area while shopping for FHA loan options and lenders. If you’re ready to jumpstart the home buying process, you may also want to check out your available resources. Get started with Rocket Mortgage® today.

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Ashley Kilroy

Ashley Kilroy is an experienced financial writer. In addition to being a contributing writer at Rocket Homes, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.