The Federal Housing Administration (FHA) recently announced new loan limits for calendar year 2022 for its Single Family Title II forward and Home Equity Conversion (reverse) Mortgage (HECM) insurance programs. Loan limits for most of the country will increase in the coming year resulting from robust house price appreciation, which is factored into the statutorily mandated calculations FHA uses as part of its methodology for determining the limits each year. The new loan limits are effective for FHA case numbers assigned on or after Jan.1, 2022.
“The increase in loan limits, commensurate with the increase in home prices, will allow qualified individuals and families to continue to access FHA-insured mortgages to achieve affordable home financing,” said Principal Deputy Assistant Secretary for Housing and FHA Lopa Kolluri.
FHA is required by the National Housing Act (NHA), as amended by the Housing and Economic Recovery Act of 2008 (HERA), to set Single Family forward mortgage loan limits at 115% of area median house prices, subject to a floor and a ceiling on the limits. In accordance with the NHA, FHA calculates forward mortgage limits by Metropolitan Statistical Area (MSA) and county.
The NHA requires FHA to establish its floor and ceiling loan limits based on the loan limit set by the Federal Housing Finance Agency (FHFA) for conventional mortgages owned or guaranteed by Fannie Mae and Freddie Mac. The national conforming loan limit for 2022 is $647,200. FHA’s 2022 minimum national loan limit “floor,” of $420,680 is set at 65% of the national conforming loan limit. This “floor” applies to those areas where 115% of the median home price is less than the “floor” limit. Any area where the loan limit exceeds this “floor” is considered a high-cost area, and the NHA requires FHA to set its maximum loan limit “ceiling” for high-cost areas at $970,800, which is 150% of the national conforming loan limit.
Due to robust increases in median housing prices and required changes to FHA’s floor and ceiling limits, which are tied to the FHFA’s increase in the conventional mortgage loan limit for 2022, the maximum loan limits for FHA forward mortgages will rise in 3,188 counties. In 45 counties, FHA’s loan limits will remain unchanged. By statute, the median home price for an MSA is based on the county within the MSA which has the highest median price.
Additionally, the FHA-insured HECM maximum claim amount will increase to $970,800 from $822,375 for calendar year 2022. FHA’s current HECM regulations do not allow the HECM limit to vary by MSA or county; instead, the single HECM limit applies to all HECMs regardless of where the property is located.
To find a complete list of FHA loan limits, areas at the FHA ceiling, and areas between the floor and the ceiling, visit FHA’s Loan Limits Page.