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2018 FHA Loan Limits Expected to Increase

2018 FHA Loan Limit Increase Likely

NEWS:  FHA Announces loan limit increases in 2018!  See update here

The 2018 FHA loan limit was not part of the announcement last week by the Federal Housing Finance Agency (FHFA) increasing the loan limit to $453,100.  FHA loan limit increase expected soon.

FHFA oversees Conventional entities, Fannie Mae and Freddie Mac.  Last year, FHFA and FHA announced loan limit increases at relatively the same time of the year.

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Both Conventional and FHA loan limit guidelines allow higher limits for high cost counties that may include higher closing costs.  Speak to your loan officer about whether or not this is an option you should pursue.

In 2017, FHA followed the FHFA guidelines and matched the high loan limits set by the Agency. Many lenders were not able to adjust right away, so there was a delay in the higher balance loan costs.

With the 2018 Loan limit increase, all but 71 Counties across the U.S. will benefit from the increase, and it’s expected that FHA will follow suit shortly.

2018 FHA Loan Limit Calculation

If history is any indication of things to come, FHA announced it was following Fannie Mae’s lead and matched loan limits on December 1st, 2016.  I would expect that we will see an announcement before the holiday break.

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If FHA follows the same methodology for calculating loan limit increases, expect a 6.8% increase from where your FHA loan limit is now.

Here is an excerpt from the FHFA website:

The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price.

Earlier today, FHFA published its third quarter 2017 House Price Index (HPI) report, which includes estimates for the increase in the average U.S. home value over the last four quarters.

According to FHFA’s seasonally adjusted, expanded-data HPI, house prices increased 6.8 percent, on average, between the third quarters of 2016 and 2017.

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Therefore, the baseline maximum conforming loan limit in 2018 will increase by the same percentage.

 

About Your Expert

Scott Schang

As a 19 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

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