What is a conforming loan?  

Conforming loans comply with the terms and funding criteria of Fannie Mae and Freddie Mac. Conforming loans typically have lower interest rates and are a great option for borrowers with excellent credit!  

 

Will conforming loan limits go up in 2023? 

The Federal Housing Finance Agency has raised the 2023 conforming loan limits for Fannie Mae and Freddie Mac to $726,200 in most of the U.S. This is a substantial increase compared to 2020’s conforming loan limit set at $510,400.  

 

What is the maximum you can borrow on an FHA loan? 

The maximum amount you can borrow on an FHA loan has just been raised by The Federal Housing Administration (FHA) to $472,030 in most areas for 2023. This means more people can take advantage of FHA loan programs with lower down payments, lower cash-to-close options, the ability to combine purchase, rehab, and more! 

For FHA borrowers in high-cost areas, the maximum loan limit for a 1-unit property in a high-cost-county is $1,089,300. Special exception loan limits in Alaska, Hawaii, Gaum, and the U.S. Virgin Islands cap single-family home loans at $1,633,950.  

Factors such as credit score, debt-to-income ratio, and down payment amount will impact how much you are able to borrow. Calculate how much FHA loan you can qualify for using our mortgage calculators!  

 

2023 FHA Loan Limits 

The new 2023 FHA Loan Limits are below and will be effective on or after January 1st, 2023.   

Property Size Low-Cost Area “Floor” High-Cost Area “Ceiling” Alaska, Hawaii, Guam, U.S. Virgin Islands “Ceiling”
One-Unit $472,030 $1,089,300 $1,633,950
Two-Units $604,400 $1,394,775 $2,092,150
Three-Units $730,525 $1,685,850 $2,528,775
Four-Units $907,900 $2,095,200 $3,142,800

 

 

How does FHA determine loan limits? 

The FHFA sets annual lending limits. The limits vary depending on the county in which you live and the type of property you are purchasing. Areas with a low cost of living set a lower limit called the “floor”. While areas with a higher cost of living have a higher figure, called the “ceiling.” 

The limits are also based on conforming loan limits established by The Federal Housing Finance Agency (FHFA). Which falls under these limits but isn’t explicitly guaranteed by either Fannie Mae or Freddie Mac. To determine its minimum national lending limit, the FHA uses the national conforming loan limits to determine the maximum amount it will assure.  

 

How exactly does an FHA loan work? 

FHA Loans are governed by the Housing of Urban Development (HUD), which offers flexible guidelines for borrowers with limited down payment funds and an imperfect credit history. 

  • 3.5% down payment. 
  • Flexible use of gift funds and grants for a down payment. 
  • Flexible qualifying credit – it’s possible to qualify with a lower credit score. 
  • Upfront mortgage insurance may be financed or paid at the closing table. 

 

Are FHA and conventional loan limits the same? 

In comparison to conventional loans, FHA loans have a few key differences. A loan limit is one factor to consider. For instances, in most U.S. states, conforming loan limits are $726,200, while FHA loans can be taken out up to $472,030. Each type of home loan has its own advantages and serves a different purpose. 

FHA Loan Benefits

Low Down Payments

As little as 3.5% down will work in most instances, and 5% covers most others.

Higher Loan Amounts

In some areas, FHA maximums can exceed conventional loan limits.

Lower Total Cash to Close

Sellers can help pay closing costs, and borrowers can receive gift money toward their down payments.

Streamlined and Cash Out Refinancing

Subsequent refinancing can be far easier and more lenient than with conventional loans.

Purchase and Rehab Financing

The FHA 203k loan can be a great option for the purchase of homes needing anything from a quick, spruce-up to a major remodeling. 

Conventional Loan Benefits

Down Payment Options

There is a range of down payment options.

Can Eliminate Mortgage Insurance 

One benefit of a conventional loan with a 20% down payment is that it can eliminate mortgage insurance.

Less Restrictive 

The property guidelines are less restrictive.

Affordable Housing Programs

There are many affordable housing programs that offer borrowers the opportunity to purchase a home with a 3% down payment. 

 

What is the max loan amount for FHA streamline refinance? 

FHA Streamline works much like any other refinance. Generally, you get a lower interest rate and lower monthly payments by replacing your existing loan with a new FHA mortgage. One of the main benefits is that they do not require a home appraisal and your lender does not have to verify your income or credit! 

According to HUD, the maximum loan amount for FHA streamline refinance is up to 95% LTV on FHA first mortgage that does not exceed $417,000. Otherwise limited to 85% LTV. Standard cash-out maximum mortgage calculation up to 95%.  

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