Will FHA Loan Limits Increase in 2025?

According to our research, FHA loan limits could increase 6.14% next year, from $498,257 in 2024 to $528,850 in 2025.

FHA loan limits could be on their way up in 2025 and it could help you buy more home.

Each year, FHA loan limits are updated along with conventional limits established by the Federal Housing Finance Agency (FHFA), the overseer of Fannie Mae and Freddie Mac.

Looking at FHFA methodology, we can make some educated guesses about FHA loan limit changes in 2025.

Will 2025 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 conventional 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 increases for both conventional and FHA loans.

Using FHFA’s methodology, we find that conventional loan limits might increase by 6.14% assuming Q3 home price increases are similar to those in Q2.

Percentage change

= (2024Q2 HPI – 2023Q2 HPI) / 2023Q2 HPI
= (406.14 – 382.64) / 382.64*
= 6.14 percent

If Q3 home prices are similar to Q2, the conventional loan limit could increase to $813,625 in 2025.

Because FHA sets limits at 65% of conventional limits, FHA loan limits might increase to $528,850 in 2025, a 6.14% increase from $498,257 in 2024.

The 2025 FHA loan limits could rise to the following amounts, assuming the same logic for 2-, 3-, and 4-unit homes.

Keep in mind, however, that home price increases can change dramatically from quarter to quarter. We won’t know the official 2025 loan limits until FHFA and HUD release final numbers toward the end of November 2024.

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 2025 limits for these areas will be determined on a case-by-case basis depending on home price changes within the area.

Can 2025 FHA Loan Limits Decrease?

FHA loan limits cannot decrease even if Q3 2024 home prices decline from Q3 2023 levels. In this case, FHA loan limits would remain the same.

Likewise, if a particular county’s home prices drop, FHA loan limits will stay the same, following the same guidelines FHFA sets for conventional loans.

Should FHA Buyers Wait Until 2025?

Homebuyers might be tempted to wait for potentially higher loan limits in 2025, especially if they need an FHA loan.

However, there’s no guarantee that limits will increase, and home prices are on an upward trajectory.

Buyers who can afford a home using today’s FHA loan limits should consider buying before prices have a chance to climb further in 2025.

Methodology and notes:

*Loan limits are based on FHFA’s expanded-data indexes, which is why the above figures differ from commonly cited HPI numbers. Additionally, FHFA uses a multiplier above the 1-unit high-cost limit to determine 2-, 3-, and 4-unit high-cost maximums:

2-unit: 1.28021583 X 1-Unit High-Cost Max
3-unit: 1.54748201 X 1-Unit High-Cost Max
4-unit: 1.92314149 X 1-Unit High-Cost Max

Sources:

FHFA Loan Limits Addendum
Fannie Mae