The Federal Housing Administration (FHA) announced last week its new schedule of 2018 loan limits, with most areas in the country expected to experience an increase in the coming year.
The FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008 (HERA), to set Single Family forward loan limits at 115 percent of median house prices, subject to a floor and a ceiling on the limits.
The schedule referenced in high-cost areas of the country, FHA’s loan limit ceiling would rise to $679,650 from $636,150 while increasing its floor to $294,515 from $275,665. Officials said the National Mortgage Limit for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, would increase to $679,650 from $636,150.
Presently, the FHA’s floor is set at 65 percent of the national conforming loan limit of $453,100, officials said, noting the floor applies to those areas where 115 percent of the median home price is less than the floor limit. Any areas where the loan limit exceeds the floor is considered a high-cost area and HERA requires the FHA to set its maximum loan limit ceiling for high-cost areas at 150 percent of the national conforming limit.
Officials said since the enactment of HERA and The Economic Stimulus Act of 2008, which temporarily raised FHA limits even further, FHA’s loan limits have been more closely tied to, and at times in excess of, those for Government Sponsored Enterprise or GSE-eligible loans.