There's Still Time to Buy a Home With Higher 2023 FHA Loan Limits

September 19, 2023

2023 isn’t over yet, and even though at the time of this writing we are staring at the final quarter of the year some will still find time to purchase a home with 2023 FHA loan limits which were raised again on New Year’s Day 2023.

If you aren’t sure whether to commit to buying a home this year, know that FHA loan limits are recomputed annually and published just before the start of the new year. In some cases the limits are available a week or two before the new year, in others they may “drop” just before New Year’s Eve.

The current year’s FHA loan limits are good from the first day of the year until the last. If you have an FHA case number in 2023, you will likely qualify for the 2023 FHA loan limit.

What Happens if Your FHA Loan Case Number Is Issued in the New Year

If you started an FHA loan application in 2023 but it was not assigned an FHA case number until 2024, your FHA loan limit is NOT the 2023 version, but the updated 2024 version. You won’t be
“grandfathered” into the 2023 rate just because the process began in that year.

FHA Loan Limits Vary

Some assume we are talking about FHA loan limits by county or zip code when we mention that the loan limits vary. And that is true--one zip code may have a different FHA loan limit than another. Rural Pennsylvania won’t have the same loan limits as Hawaii or New York City.

But FHA loan limits also vary by property size. A single-unit home has a lower FHA loan limit than a four-unit property.

Don’t forget to factor in the size of the home you want when looking at the loan limits, otherwise you might mistakenly assume that the single-unit loan limit is the best you can do.

What You Need to Know About FHA Loan Limits

When the limits are calculated for the new year, they are not guaranteed to stay the same. Depending on market conditions the rates may increase or decrease. Sometimes the FHA loan limits do stay the same from year to year, but that’s not something that you can predict.

Borrowers who want to wait in hopes that the loan limits might increase again in 2024 should know the same lack of guarantees applies here, too. Why? Because FHA loan limits are calculated using data collected earlier in the year based on housing market conditions.

The limits are not arbitrarily set, they require a set of calculations to arrive at the right amount for a given zip code or county.

FHA loan limits are available online, you can look up this year’s rates to get an idea what to expect for one-bedroom to four bedroom owner-occupied residences.

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