FHA loans are a popular program for first time home buyers for their low down payment requirement and the ability to use gifted funds for down payments. For many buyers, FHA is the only program for which they qualify. The downside is, there are limits to amount that can be borrowed. Fortunately, FHA loan limits for 2019 are increasing in almost all areas of Massachusetts and New Hampshire.
FHA Loan Thresholds
There are two components to loan limits: nationally set thresholds and specific limits by county. Nationally, FHA sets an allowable range for limits. County-specific loan limits must be no less than the minimum and no more than the maximum. For 2019, the minimum is $314,827 and the maximum is $726,525. This is a 6.89% increase from last year.
For individual counties, the loan limit is determined by calculating 115% of the median sales price. However, the amount must fall within the national range, as noted above. So, if 115% of the median price is below $314,827, then the limit for that county will be $314,827. If 115% of the median price exceeds $726,525, then the loan limit will be $726,525. If 115% of the median price is somewhere in between the allowable range, then the exact figure is used.
FHA Loan Limits for 2019 by County
Massachusetts Counties
| County Name | One-Family | Two-Family | Three-Family | Four-Family |
| BARNSTABLE | $458,850 | $587,400 | $710,050 | $882,400 |
| BERKSHIRE | $314,827 | $403,125 | $487,250 | $605,525 |
| BRISTOL | $454,250 | $581,500 | $702,900 | $873,550 |
| DUKES | $726,525 | $930,300 | $1,124,475 | $1,397,400 |
| ESSEX | $688,850 | $881,850 | $1,065,950 | $1,324,750 |
| FRANKLIN | $314,827 | $403,125 | $487,250 | $605,525 |
| HAMPDEN | $318,550 | $407,800 | $492,950 | $612,600 |
| HAMPSHIRE | $318,550 | $407,800 | $492,950 | $612,600 |
| MIDDLESEX | $688,850 | $881,850 | $1,065,950 | $1,324,750 |
| NANTUCKET | $726,525 | $930,300 | $1,124,475 | $1,397,400 |
| NORFOLK | $688,850 | $881,850 | $1,065,950 | $1,324,750 |
| PLYMOUTH | $688,850 | $881,850 | $1,065,950 | $1,324,750 |
| SUFFOLK | $688,850 | $881,850 | $1,065,950 | $1,324,750 |
| WORCESTER | $327,750 | $419,550 | $507,150 | $630,300 |
New Hampshire Counties
| County Name | One-Family | Two-Family | Three-Family | Four-Family |
| BELKNAP | $314,827 | $403,125 | $487,250 | $605,525 |
| CARROLL | $314,827 | $403,125 | $487,250 | $605,525 |
| CHESHIRE | $314,827 | $403,125 | $487,250 | $605,525 |
| COOS | $314,827 | $403,125 | $487,250 | $605,525 |
| GRAFTON | $314,827 | $403,125 | $487,250 | $605,525 |
| HILLSBOROUGH | $322,000 | $412,200 | $498,250 | $619,250 |
| MERRIMACK | $314,827 | $403,125 | $487,250 | $605,525 |
| ROCKINGHAM | $688,850 | $881,850 | $1,065,950 | $1,324,750 |
| STRAFFORD | $688,850 | $881,850 | $1,065,950 | $1,324,750 |
| SULLIVAN | $314,827 | $403,125 | $487,250 | $605,525 |
Benefits of Higher FHA Loan Limits
Increased Buying Power
For FHA home buyers, the increased limits lead to more buying power. For instance, buyers in Dukes County, MA were previously limited to borrowing $679,650 with an FHA loan. In 2019, those same buyers can borrow up to $726,525, assuming they otherwise qualify for the higher loan amount. Given the hot market, this increase will allow buyers to better compete in bidding wars and keep up with the inclining market.
Avoiding Jumbo Loans
Another advantage is the ability to avoid jumbo loans. Jumbo loans are normally more difficult to qualify for and have slightly higher interest rates. By increasing the loan limit, some buyers can now use regular FHA loans instead of FHA jumbo loans.
Lower Down Payments
As we mentioned earlier, one of the benefits of FHA is a low downpayment option of 3.5%. However, some buyers have to put down more in order to stay within loan limits. Let’s imagine you were a buyer in Sullivan County during 2018. If you were purchasing a home for $310,000, your 3.5% down payment should be $10,850 and loan amount $299,150. Since FHA would only loan $294,515 in that county, you would have to put down an additional $4,635 ($299,150 – $294,515 = $4,625) to make up the difference. Since the loan limits for 2019 have increased to $314,827, you would not have to put down anything extra to buy a $310,000 home. In fact, you could purchase up to $326,245 with 3.5% down (again, assuming that you otherwise qualify).
Update Your Pre-approval
Now that you’re up to speed on the FHA loan limits for 2019 and how it might impact you, it’s time to get some real numbers. Contact me for a pre-approval on an FHA loan for 2019. If you have a pre-approval from 2018, I can provide new figures based on these new loan limits.