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!

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Will FHA loan limits increase in 2025?

Direct Mortgage Loans now offers conforming loans up to $806,500. The Federal Housing Finance Agency (FHFA) has raised the 2025 conforming loan limits for Fannie Mae and Freddie Mac to $806,500 in most of the U.S. This is a substantial increase compared to 2024’s conforming loan limit set at $766,550.

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

The maximum amount you could borrow on an FHA loan has just been raised by The Federal Housing Administration (FHA) to $524,225 in most areas for 2025. This means more people could 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 $1,209,750. Special exception loan limits in Alaska, Hawaii, Gaum, and the U.S. Virgin Islands cap single-family home loans at $1,814,625.

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!

See how much you can afford.

Your approval amount will give you an estimate on how much house you can afford.

Current FHA Loan Limits

The 2025 FHA Loan Limits are below and will be effective on or after January 1st, 2025.

Property Size Low-Cost Area “Floor” High-Cost Area “Ceiling” Alaska, Hawaii, Guam, U.S. Virgin Islands “Ceiling”
One-Unit $524,225 $1,209,750 $1,814,625
Two-Units $671,200 $1,548,975 $2,232,450
Three-Units $811,275 $1,872,225 $2,808,325
Four-Units $1,008,300 $2,326,875 $3,490,300

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 considered a government backed mortgage loan. They 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 $806,500, while FHA loans could be taken out up to $524,225. Each type of home loan has its own advantages and serves a different purpose.

Find out what your mortgage options are!

Get expert advice and find out what you qualify for when you submit your application online.

FHA Loan Benefits

Low Down Payments

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

FHA 100% Financing

This program provides homebuyers with 100% financing without requiring a down payment. However, closing costs are still required. This is achieved through a combination of a 1st and 2nd mortgage. This down payment assistance program can be used to obtain an FHA loan and the amount of the 2nd mortgage can be up to 3.5% of the sales price or the appraised value, whichever is less. The term for the 2nd mortgage is 10 years.

  • Eligibility
    • To qualify for the program, you need to have a minimum credit score of 620 and a maximum Debt-to-Income (DTI) ratio of 45%. You must complete a Homebuyer Education course. And the eligible properties for financing are defined by FHA guidelines based on the maximum HUD county limit. The program covers single-family homes, duplexes, manufactured homes, PUDs, townhouses, and condos.

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 mortgage lender does not have to verify your income or credit!

The FHA streamline refinance program offers different maximum loan amounts based on the type of refinance you’re considering and may also be influenced by county-specific limits. Here’s a breakdown of the maximum loan amounts:

  • For a Rate/Term Streamline refinance, you could borrow up to 97.75% of your property’s appraised value.
  • If you’re interested in a Cash-Out Streamline refinance, the maximum loan amount is typically 80% of your property’s appraised value.

Please note that these limits could vary depending on your specific location due to county-specific regulations.

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*Down payment programs availability subject to additional eligibility requirements that may vary. Eligibility and approval is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral and underwriting requirements. Some products may be unavailable. Speak with a qualified mortgage professional to determine which programs may be available to you. Direct Mortgage Loans, LLC NMLS ID# is 832799 (www.nmlsconsumeraccess.org). Direct Mortgage Loans, LLC office is located at 11011 McCormick Rd Suite 400 Hunt Valley, MD 21031. Equal housing lender.