Phoenix (Maricopa County) FHA Loan Limits, 2016

There is good news and bad news regarding 2016 FHA loan limits for Maricopa County, Arizona. The good news is that loan limits for the Phoenix metro area, and the rest of the county, will not be decreasing in 2016 as they have in the past. At the end of 2015, the Federal Housing Administration announced it would keep all caps at their existing levels — meaning no changes for 2016.

The bad news is that FHA loan limits for Marricopa County will reduce purchasing options for some buyers, due to rising prices in this housing market. This is especially true in the Phoenix area, where prices are expected to continue rising through 2016.

FHA Loan Limits for Phoenix & Maricopa County in 2016

Here are the 2016 FHA loan limits for Phoenix and the rest of Maricopa County, according to the Department of Housing and Urban Development (HUD):

Property Size Loan Limit
One-family $271,050
Two-family $347,000
Three-family $419,425
Four-family $521,250

Again, these are the same maximum lending amounts we saw in 2015 for this area. They will simply carry over to 2016, with no changes whatsoever. They apply to all other cities in Maricopa County as well, to include Chandler, Glendale, Mesa, Scottsdale and Tempe.

The question is, how do these figures stack up to home prices in the area? Will FHA borrowers be limited to the lower end of the housing market, due to these loan limits? Let's take at look at the current state of things in the Phoenix real estate market.

Median Home Prices in the Area

According to Zillow, the median home value for Maricopa County is $204,800 (as of January 1, 2016). According to Trulia, the median sales price for houses in the Phoenix metro area was $175,000, for the 12-month period ending in December 2014.

This means the FHA loan limit for this area will allow most buyers to find suitable housing. In other words, most moderately priced homes within Maricopa County fall within the allowable range for FHA-insured financing. This is good news for borrowers who are considering this program, particularly first-time buyers who are shopping on the lower end of the pricing spectrum.

Of course, many homes are priced about the $271,050 single-family cutoff mentioned above. But that's the reality of using a government-backed loan program such as this one. This program is not intended to finance higher-end properties. It was developed to help borrowers with limited funds purchase a modestly price home. The Phoenix FHA limits above reflect this.

Bottom line: Borrowers interested in higher-cost homes should be looking toward conventional financing — not the FHA program.

About the County

Maricopa County has a sprawling population of just over 4 million people, according to the most recent census survey data. That makes it the most populous county in the state of Arizona, and the fourth most populous in the entire United States.

Major cities include Chandler, Glendale, Mesa, Phoenix, Scottsdale and Tempe. The 2016 FHA loan limits mentioned above apply to these and all other cities located within Maricopa County.

Is FHA Right for You?

Statistics show that Federal Housing Administration loans are very popular among first-time home buyers in the Phoenix metro area. They are especially popular with borrowers who have limited funds saved for a down payment. There's a reason for this popularity. When using this program, borrowers can put down as little as 3.5% of the purchase price or appraised value (whichever is less). This is lower than the average down payment for a conventional home loan.

But there are disadvantages as well. Phoenix home buyers who opt for an FHA loan have to pay for additional mortgage insurance. This cost can be "rolled" into the base loan amount, which increases the size of the monthly payments as well as the total amount paid over time.

Those are the primary pros and cons of the program. Is it the right financing option for you? Check out our handbook to learn more.

Disclaimers: This article includes FHA loan limits for the Phoenix metro area and Maricopa County. It is based on information disseminated by the Department of Housing and Urban Development (HUD) in December 2014. The maximum lending limits stated above should remain in effect through the end of 2016. But it's possible they could change sometime during the next 12 months. For the latest and most comprehensive information available, please refer to the official HUD.gov website.