The Federal Housing Administration has raised conforming loan limits to $525,000 for most U.S. counties, a 5% increase that reflects continued home price appreciation. High-cost areas like San Francisco, New York, and Hawaii will see limits up to $1,149,825.
The increase expands access to FHA financing, which requires down payments as low as 3.5% and has more lenient credit score requirements than conventional loans. FHA loans remain the most popular financing option for first-time homebuyers, accounting for 30% of purchase originations.
The higher limits are particularly significant in markets where home prices have outpaced the previous FHA ceiling. In cities like Phoenix, Denver, and Austin, the increased limits bring thousands of additional properties within FHA qualification range.
FHA also announced a reduction in its annual mortgage insurance premium from 0.55% to 0.50% for most borrowers, saving the typical FHA borrower approximately $250 per year. The premium reduction reflects the strong financial position of the FHA insurance fund.
Industry groups praised the changes but noted that FHA's life-of-loan mortgage insurance requirement continues to make FHA loans more expensive over time compared to conventional loans where PMI can be removed at 80% loan-to-value.
