97% Of US Counties Will Have Higher FHA Loan Limits In 2019 

Nearly 97% of all US counties will start 2019 with higher Federal Housing Agency (FHA) loan limits than 2018. An increase in loan limits helps offset the 77 consecutive months of year-over-year gains in home prices by offering lower down payment and credit score options. Our Director of Economic Research, Ali Wolf, dug through the data and pulled out the figures you need to know from the release. 


The FHA sets a ceiling and floor each year for the loan limits based on median home prices. The new ceiling of $726,252 is 7% higher than the $679,650 from last year. Metros like Seattle, Los Angeles, and New York fall under that umbrella. The floor of $314,827 is seen in places like Orlando.

3,053 counties got a bump in their loan limit for 2019, with one big metro missing from the mix: Houston. Our Senior Vice President of Advisory, Scott Davis, attributes the snub to Houston's flexible land-use rules. Unlike many markets in the country, Houston is able to re-plat land very quickly to meet changing demand, which has kept price appreciation at bay. 

According to Zonda, communities that are priced below the FHA loan limit sell on average 50% faster than those above.

On a percentage basis, Salt Lake City, Seattle, and Charlotte saw the biggest jump in their maximum loan option, up 10%, 9%, and 8%, respectively.

We can measure the actual impact of the new limits with Zonda data. For example, 5% more communities nationally now fall within the range compared to 2018 values. In absolute terms, Raleigh, Phoenix, Salt Lake City, Riverside, and Las Vegas are the clear winners (see graph below).


Higher loan limits could move the needle for Raleigh. 

Raleigh's median home price is among the most expensive in the Carolinas. Affordability is faltering even as median household incomes top $75,000, 23% higher than the national average. Currently, 47% of households can afford the median-priced new home.

The new FHA loan limit of $339,250 in Wake County boosts the number of communities that fall in the range from 31% to 44%. This totals 37 new communities.

"Homebuilders are increasingly adjusting their product to deliver more affordable townhomes and small lot single-family homes to allow for pricing that falls within FHA loan limits, and the 6% boost from HUD will help even more," explained Shaun McCutcheon, our Southeast expert.


FHA communities excel in Phoenix.

35 actively selling communities in Phoenix now fall within the 2019 loan limit. The market could see a boost in sales activity as communities priced below FHA sell 70% faster than those above. 

In-migration demand is high in the Southwest as Phoenix is the #1 inflow market in the nation based on Redfin search data and Las Vegas is #4.

Domestic demand and in-migration are driving up local prices. Prices in Phoenix grew nearly 20% from 2015 to 2018. 

"The most recent increase in the FHA loan limit in Maricopa County will provide additional support for our market and will allow a broader segment of our consumer base to become homeowners," said our Managing Director of Advisory and Phoenix specialist, Steve LaTerra.

The change in the FHA loan limits follows the 6.9% bump in conforming loans announced late last month. With affordability top of mind for the housing market, even the slightest changes in lending rules can help potential buyers become homeowners.


Contact us to discuss how we can help you with positioning your product to attract FHA buyers.

Authored by Ali Wolf, Director of Economic Research at Meyers Research

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