At a glance: The maximum FHA loan amount for 2017 ranges from $275,665 to $636,150, depending on the location. These limits vary by county. Here’s a complete list.
Reader question: “We’re hoping to buy a house in 2017 using an FHA loan. I’m wondering what the maximum mortgage loan amount is for the FHA program in 2017. I tried to research this online and learned about the loan limits, but it seems very confusing. Is there a single number that applies to all borrowers? Or does the maximum FHA loan amount vary depending on where you live?”
I can understand your confusion. Loan limits and maximum mortgage sizes can be very confusing, and for a couple of reasons. Yes, they do vary by location. There are also different size limits for different types of mortgage loans (e.g., FHA versus conventional). Additionally, the maximum amount you are qualified to borrow can be determined by the mortgage lender you use, based on your current income.
Here’s what you need to know about the maximum FHA loan amounts.
Maximum FHA Loan Amounts in 2017
The official maximum FHA loan amount for 2017 ranges from $275,665 to $636,150, depending on the location. These limits are set at the county level. So you’ll want to refer to the specific limits for the county in which you were planning to buy a home. (See the link at the top of this page.)
Maximum FHA loan amounts are based on median home prices, so they tend to go up in more expensive real estate markets. For example, in the San Francisco Bay Area where home prices are much higher than the national average, the maximum FHA loan size is $636,150. In less expensive parts of the country, it can be set at $275,665. There’s a broad spectrum in between.
So the first thing you want to do is find the current 2017 FHA loan limits for the county in which you reside – or the county where you plan to buy a home, if you are relocating. That’s the first step in determining the maximum FHA loan amount that applies to you.
The amounts mentioned above are the official limits for the FHA mortgage insurance program. How much you can actually borrow will be determined by a mortgage lender, and that will largely depend on your current income and debt situation. So let’s talk about that next.
Debt-to-Income Ratios Also Affect Your Borrowing Power
When you apply for a mortgage loan — whether it’s FHA, VA or conventional — the mortgage lender will review your current financial situation to determine how much you are able to borrow. When deciding on maximum loan amounts, they will consider your debt-to-income ratio (DTI).
This is a comparison between the amount of money you earn each month and the amount you spend on your various debts. The goal here is to ensure you aren’t taking on a loan that’s too big for you. It’s in everyone‘s interest to make sure that you can actually afford your monthly mortgage payments. So that’s why they look at the debt-to-income.
The Department of Housing and Urban Development has guidelines for debt ratios, and they can affect the maximum FHA loan amount you’re able to borrow. Current HUD guidelines state that borrowers should have a total DTI no greater than 43%. That means your combined recurring debts (including the mortgage payment) should use up no more than 43% of your income.
But there are exceptions to this rule. I’ve covered these compensating factors in a separate article. So don’t get too hung up on that number. It’s just a general guideline to help lenders determine the maximum FHA loan amount based on the borrower’s debt and income situation.
So, those are the two steps you want to go through when determining your maximum FHA mortgage size.
- Start by looking at the loan limits for your county. These limits are reviewed, and sometimes revised, every year. So you have to make sure you’re looking at 2017 data.
- Next, you’ll want to consider your debt-to-income ratio. This also affects the amount you’re able to borrow.
It’s also a good idea to have a basic housing budget on paper, before you even start talking to mortgage lenders. This can help you prevent financial problems down the road.
Once you’ve done a bit of preliminary research, I recommend that you get pre-approved for an FHA loan to see what your maximum mortgage amount might be.