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Homebuyers putting as little as 3.5 percent down will be able to borrow at least $524,225 in low-cost markets next year and as much as $1.2 million in high-cost markets like New York, San Francisco and Washington, D.C., after a 5.2 percent increase in 2025 FHA loan limits announced Tuesday goes into effect on Jan. 1.
The ceiling for single-family homes in Alaska and Hawaii is being raised to more than $1.8 million in recognition of higher construction costs in those states.
Julia Gordon
“Today’s announcement of loan limit increases, calculated according to statute, enables the FHA program to keep up with nationwide price appreciation,” Federal Housing Commissioner Julia Gordon said, in a statement. “Regular adjustment of loan limits ensures that FHA financing continues to be available in all markets to all those who rely on our programs to access homeownership.”
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The higher loan limits on mortgages backed by the Federal Housing Administration (FHA) track similar increases for conforming loans eligible for purchase by Fannie Mae and Freddie Mac.
Fannie and Freddie’s 2025 conforming loan limit for single-family homes will be $802,650 in most markets, and up to $1,209,750 in high-cost markets, the Federal Housing Finance Agency (FHFA) said in a separate announcement Tuesday.
FHA loan limits vary by county or Metropolitan Statistical Area (MSA), and are typically equal to 115 percent of the median home price for that market.
A minimum national loan limit floor allows buyers in low-cost markets to qualify for loans that exceed 115 percent of the median home price, while ceilings in high-cost markets prevent FHA from having to insure homes that are considered out of reach for most first-time homebuyers.
2025 FHA loan floors and ceilings
FHA’s 2025 minimum national loan limit floor for one-unit properties is $524,225, which is 65 percent of Fannie and Freddie’s conforming loan limit. That’s up $25,968 from the 2024 floor of $498,257.
The maximum loan limit ceiling in most high-cost areas is 150 percent of the conforming limit, or $1,209,750 for one-unit properties, a $59,925 increase from 2024.
To account for higher construction costs in Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the new FHA ceiling in those markets is $1,814,625, up from $1,724,725 in 2024. The 2025 ceiling for four-unit properties in those markets is $3,490,300.
In its annual report to Congress on the health of the FHA mortgage insurance program, the Department of Housing and Urban Development said 82 percent of FHA purchase mortgages were taken out by first-time homebuyers.
In 2023, FHA lenders did more than twice as much business with Black borrowers (16.7 percent) and Hispanic borrowers (22.8 percent) as the rest of the market.
Private mortgage insurers compete with FHA and VA loan programs to serve homebuyers who can’t afford — or don’t want — to make a big down payment.
Fannie Mae and Freddie Mac require private mortgage insurance when homebuyers put less than 20 percent down.
Mortgage insurance premium cuts in 2015 and 2023 made FHA mortgages more attractive than conforming mortgages with private mortgage insurance for most borrowers putting down less than 5 percent, according to an analysis by the Urban Institute.
But borrowers with FICO scores above 740 could get a better deal taking out a conforming loan backed by Fannie or Freddie with private mortgage insurance, the analysis found.
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