Orange County, CA FHA Loan Limits for 2017

FHA loan limits for Orange County, California will go up in 2017, in response to rising home prices in the county. In 2017, the FHA loan limit for a single-family home will rise to $636,150. That’s an increase of more than $10,000 over the 2016 cap of $625,500. See the table below for more details.

FHA Loan Limits for Orange County, California in 2017

Here are the 2017 FHA loan limits for Orange County, California, in all four property types:

One-Family Two-Family Three-Family Four-Family
$636,150 $814,500 $984,525 $1,223,475

Note: The “one-family” column applies to single-family properties and therefore applies to most “regular” home buyers in Orange County. The other columns pertain to multi-family housing units like duplexes and triplexes, which are typically purchased by investors.

A Response to Rising Home Values

According to the real estate information company Zillow, the median home price in Orange County, California rose by nearly 5% during 2016. Some sources report even larger gains. This is partly why the Department of Housing and Urban Development (HUD) raised the loan limits.

According to a December 1, 2016 press release: “In high-cost areas [such as Orange County], the FHA national loan limit ‘ceiling’ will increase from $625,500 to $636,150. The Federal Housing Administration will also increase its ‘floor’ from $271,050 to $275,665 .”

These changes will apply to FHA-insured mortgage loans with case numbers assigned on or after January 1, 2017, and will remain in effect through the end of the year. They are reviewed, and sometimes revised, on an annual basis.

As of December 2016, the median home price within Orange County was $668,300, which is slightly higher than the 2017 FHA loan limit for the county. This means the local housing market is largely split between homes that fall within the above limits, and homes that are priced above them. In other words, there are many homes for sale in Orange County that are simply too expensive for FHA loans.

This is by design. The program is primarily intended for borrowers of low to moderate income. It’s not intended for home buyers purchasing expensive properties at the upper end of the pricing spectrum.

Applies to the Entire Los Angeles Metro Area

FHA loan limits vary by county and are partly determined by median home values within a particular county. With that being said, they tend to be the same across entire metropolitan areas, which is the case here as well.

As a result of this uniformity, the 2017 Orange County FHA loan limits shown in the table above apply to the entire Los Angeles-Long Beach-Anaheim metro area. They apply to all cities within Orange and Los Angeles counties.

FHA vs Conventional Mortgage Loans

Created by the National Housing Act of 1934, the Federal Housing Administration has been helping home buyers purchase homes for decades. The FHA does not lend money directly to borrowers. Rather, it insures loans made by mortgage lenders that operate in the private sector. This insurance protects the lender (not the borrower) from losses that can result in the case of borrower default.

A conventional home loan, by contrast, does not receive any government backing.

Orange County FHA loans offer down payments as low as 3.5%. The qualification criteria are often less strict as well, when compared to a conventional mortgage. This is what attracts borrowers to the program.