Will FHA Loan Limits Increase in 2024?
According to our research, FHA loan limits could increase 3.9%, from $472,030 in 2023 to $490,425 in 2024.
Each year, FHA loan limits are updated, closely following conventional loan limit changes established by the Federal Housing Finance Agency (FHFA), the overseer of Fannie Mae and Freddie Mac.
FHFA offers a detailed methodology for conventional/conforming loan limit changes. Looking at these calculations, we can get a preliminary idea about what might happen to FHA loan limits in 2024.
Will 2024 FHA Loan Limits Increase?
The U.S. Department of Housing and Urban Development (HUD) sets FHA limits at 65% of national conventional loan limits set by FHFA.
FHFA determines its loan limits by comparing year-over-year home price changes in the third quarter as measured by its Home Price Index.
As of this writing, the third quarter is not over. But second-quarter results might shed light on potential loan limit increases for both conventional and FHA loans.
Using FHFA’s methodology, we find that conventional loan limits might increase 3.9% in 2024, assuming Q2 and Q3 home price increases are similar.
Percentage change
= (2023Q2 HPI – 2022Q2 HPI) / 2022Q2 HPI
= (379.68 – 365.37) / 365.37*
= 3.9 percent
This calculation would put 2024 conventional loan limits at $754,500, up from $726,200 in 2023.
Because FHA sets limits at 65% of conventional limits, FHA loan limits might increase from $472,030 in 2023 to $490,425 in 2024, representing a 3.9% increase.
In total, 2024 FHA loan limits could increase to the following dollar amounts assuming the same logic.
Units | FHA Standard Loan Limits 2024 Estimate | FHA High-Cost Loan Limits 2024 Estimate |
1 | $490,425 | $1,131,750 |
2 | $627,965 | $1,449,150 |
3 | $759,005 | $1,751,600 |
4 | $943,345 | $2,176,900 |
Keep in mind, however, that home price increases can change dramatically from quarter to quarter. We won’t know the official 2024 loan limits until FHFA and HUD release final numbers toward the end of November 2023.
About FHA Standard and High-Cost Loan Limits
Like conventional loans, FHA loans allow higher loan limits for properties in high-cost areas.
Interestingly, it matches conventional loan limits in the most expensive areas of the U.S., allowing maximum loans up to 150% of the conventional limit.
Standard areas: 65% of the conventional limit
High-cost areas: 150% of the conventional limit
HUD also maintains a list of about 350 areas in which loan limits are somewhere between standard and high-cost levels. The 2024 limits for these areas will be determined on a case-by-case basis depending on home price changes in the area.
Can FHA Loan Limits Decrease?
FHA loan limits cannot decrease even if Q3 2023 home prices decline from Q3 2022 levels. In this case, FHA loan limits would remain the same.
Likewise, if a high-cost county’s home prices drop, FHA loan limits will stay the same, following the same guidelines as FHFA for conventional loans.
Should Buyers Wait Until 2024?
Home buyers might be tempted to wait for potentially higher loan limits in 2024, especially if they need an FHA loan and are looking in high-cost areas.
However, there’s no guarantee that limits will increase, and homes could be more expensive next year.
Buyers who can find a home using today’s FHA loan limits should consider buying before prices have a chance to climb further in 2024.
*(Note that loan limits are based on FHFA’s expanded-data indexes, which is why the above figures differ from commonly cited HPI numbers)
Tim Lucas spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. Tim has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, My Mortgage Insider, and more.
