The limit on government-backed repayable loans is rising for the ninth year in a row. I Federal Housing Administration (FHA) announced Tuesday in Mortgage Letter (ML) 2024-22 a maximum claim amount of $1,209,750 in 2025.
That’s an increase of $59,925 from the current limit of $1,149,825 for Home Equity Conversion mortgages (HECMs), which equates to an increase of about 5%.
HUD calculates this figure at 150% of the conforming loan limit for subsidized mortgages. Fannie Mae again Freddie Mac. I Federal Housing Finance Agency (FHFA) on Tuesday announced that compliance limits will increase to $806,500 by 2025.
The FHFA’s annual announcement usually serves as a “sneak peek” at HECM plan limits for the new year, but both figures are published almost simultaneously for 2023 and 2024.
Steve Irwin, president of National Reverse Mortgage Lenders Association (NRMLA), appreciated the development.
“I am pleased to see an increase in the HECM loan limit for calendar year 2025,” Irwin said in a statement to HECM. HousingWireReverse Mortgage Daily (RMD). “Given the continued, albeit limited, appreciation of home prices across the US, this increase will increase the accessibility of the FHA-Insured HECM program to older homeowners who may need to access their home equity to increase their retirement savings.”
The FHFA’s third-quarter 2024 House Price Index, also published Tuesday, saw national home prices rise 4.3% compared to the third quarter of 2023. This growth rate is slightly lower than the average seen at the same time last year (+5.5%) , and much lower than the rate seen two years ago (+12.3%).
“Most of the state’s mortgage limits will increase next year due to the continued appreciation of home prices over the past year,” the FHA said in the announcement of the new limits.
The FHA typically aligns the new HECM limit with the new adjustable rate loan limits, reflecting changes in annual home prices as required by the Housing and Economic Recovery Act of 2008.
Limit given by US Department of Housing and Urban Development (HUD) on federally backed loans in 2024 was $1,149,825, which matched the FHFA maximum cost limit and pushed the HECM borrowing limit above $1.1 million for the first time.
Continuing the trend from recent years as noted in the FHA’s Annual Report to Congress, the reverse mortgage portion of the Mutual Mortgage Insurance (MMI) Fund has reached a positive point again, with a higher level of home price appreciation compared to previous years. .
For several years, the reverse mortgage limit has been stagnant before increasing in 2017 from $625,500 to $636,150. Since then, HECM limit increases have tracked that of loan limits.
The new loan limit will apply to loans with case numbers issued on Jan. 1, 2025 or later, until Dec. 31, 2025.
The release of new HECM loan limits also came on the same day as the release of Mortgage Letter 2024-21, which specified new limits for mortgage loans. The FHA statewide mortgage “floor” and “ceiling” limits for a single-unit property in 2025 are $524,225 and $1,209,750 respectively.
This is a developing story.
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