The adjustment for rising home prices increases the FHA ceiling in high-cost markets like New York, San Francisco and Washington, DC, and raises the floor in low-cost markets to $524,225.
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Home buyers who put as little as 3.5 percent down will be able to borrow at least $524,225 in cheaper markets next year and up to $1.2 million in more expensive markets like New York, San Francisco and Washington, DC, after a 5.2 percent increase. 2025 FHA loan limits announced Tuesday take effect Jan. 1.
The ceiling for single-family homes in Alaska and Hawaii is being raised above $1.8 million due to the high cost of construction in those states.
Julia Gordon
“Today’s announcement of an increase in the loan limit, calculated by law, enables the FHA program to keep pace with the appreciation of prices across the country,” said Federal Housing Commissioner Julia Gordon, in a statement. “The regular adjustment of loan limits ensures that FHA financing continues to be available in all markets for all who rely on our programs to access home ownership.”
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Higher loan limits on loans backed by the Federal Housing Administration (FHA) track similar increases in foreclosures by Fannie Mae and Freddie Mac.
Fannie and Freddie’s 2025 loan limit for single-family homes will be $802,650 in most markets, and up to $1,209,750 in high-cost markets, the Federal Housing Finance Agency (FHFA) said in a separate announcement Tuesday.
FHA loan limits vary by state or Metropolitan Statistical Area (MSA), and are typically equal to 115 percent of the median home value in that market.
The national mortgage lending floor allows buyers in affordable markets to qualify for loans that exceed 115 percent of the median home price, while the ceiling in expensive markets prevents the FHA from insuring homes that are considered unaffordable first. -buyers at home time.
2025 FHA loan floor and ceiling
Source: Ministry of Housing and Urban Development.
The FHA’s 2025 minimum national loan limit for single-unit property is $524,225, which is 65 percent of the Fannie and Freddie concessional loan limit. That’s an increase of $25,968 from the 2024 low of $498,257.
The maximum loan limit for most expensive properties is 150 percent of the conforming limit, or $1,209,750 for single-unit properties, an increase of $59,925 from 2024.
To account for higher construction costs in Alaska, Hawaii, Guam, and the US Virgin Islands, the new FHA ceiling in those markets is $1,814,625, up from $1,724,725 in 2024. The 2025 ceiling for four-unit buildings in those markets is $3,490,300.
In its annual report to Congress on the health of the FHA insurance program, the Department of Housing and Urban Development said 82 percent of FHA home loans were issued to first-time home buyers.
By 2023, FHA lenders do twice as much business as Black borrowers (16.7 percent) and Hispanic borrowers (22.8 percent) as an alternative market.
Private mortgage insurers compete with FHA and VA mortgage programs to help homebuyers who can’t afford – or don’t want to – make a large down payment.
Fannie Mae and Freddie Mac require private mortgage insurance when home buyers put less than 20 percent down.
Mortgage insurance premium reductions in 2015 and 2023 make holding FHA more attractive than agreeing to a private mortgage insurance mortgage for many borrowers putting down less than 5 percent, according to an analysis by the Urban Institute.
But borrowers with FICO scores above 740 can get a better deal on loans backed by Fannie or Freddie with private mortgage insurance, the analysis found.
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