2025 FHA Loan Limits
Thinking about buying a home with an FHA loan? Understanding FHA loan limits for 2025 could make all the difference in how much you can borrow and the kind of property you can afford.
These limits vary based on where you live and the type of home you’re looking to buy. If affordability is a priority, FHA loans are worth exploring—they’re backed by the Federal Housing Administration and have flexible requirements, opening doors for more buyers, especially first-time homebuyers.
Let’s break down everything you need to know, from loan limits and requirements to how FHA loans work.
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What is an FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration (FHA). It’s a popular option among first-time homebuyers because of its low down payment requirements and lenient credit score guidelines.
Unlike conventional loans, which often demand a higher credit score, FHA loans allow borrowers with lower scores to secure financing.
These loans also come with a more affordable down payment option, making them ideal for those who may struggle to save large sums upfront.
What are FHA Loan Limits?
FHA loan limits are set by the federal government to make homeownership more accessible for borrowers with moderate to low incomes. These limits determine the maximum loan amount an FHA lender can approve for a specific area.
They vary based on factors such as the local real estate market, high-cost areas, and average property values. Here’s what you need to know about FHA loan limits and how they’re determined.
For 2025, the FHA has set the following limits:
Property Type | Low-Cost Area Limit | High-Cost Area Limit |
One-Unit | $524,225 | $1,209,750 |
Two-Unit | $671,200 | $1,548,975 |
Three-Unit | $811,275 | $1,872,225 |
Four-Unit | $1,008,300 | $2,326,875 |
It’s important to note that certain regions, including Alaska, Hawaii, Guam, and the U.S. Virgin Islands have higher FHA loan limits due to elevated construction costs. The limits in these areas are as follows:
- One-unit property: Up to $1,814,625
- Two-unit property: Up to $2,323,450
- Three-unit property: Up to $2,808,325
- Four unit property: Up to $3,490,300
What is the Maximum You Can Borrow on an FHA Loan?
In 2025, FHA loan limits vary based on location and property type. For single-family homes in standard-cost areas, the maximum loan amount is $524,225, while in high-cost areas, it can reach up to $1,209,750.
These limits are higher for multi-family properties, such as two-unit or four-unit homes. The U.S. Department of Housing and Urban Development (HUD) adjusts these limits annually to reflect current home prices.
For instance, in high-cost areas like Washington, D.C., the FHA loan limit for a single-family home is $1,209,750, whereas in low-cost areas, it's capped at $524,225.
How Much is FHA Mortgage Insurance?
One key cost that comes with an FHA loan is the mortgage insurance premium (MIP). This insurance is required by the FHA to protect the lender in case the borrower defaults.
MIP includes both an upfront premium, typically 1.75% of the loan amount, and an annual payment split into monthly payments. This mortgage insurance ensures the FHA loan program’s stability and is one of the trade-offs for accessing a loan with a lower down payment requirement.
FHA mortgage insurance is required for most FHA loans, and while it may seem costly, it helps more borrowers to qualify.
Can I Remove FHA Mortgage Insurance?
Unfortunately, FHA mortgage insurance can’t simply be canceled in most cases. Borrowers typically need to refinance into a conventional loan once they build up enough home equity to eliminate the insurance.
If you’re thinking of refinancing, consider the impact of current mortgage rates and any closing costs involved in the refinance. By exploring this option with a qualified mortgage lender like Rate, you can determine whether removing FHA insurance might benefit your specific financial situation.
Local FHA Loan Limits (How to Find Them)
Local FHA loan limits vary widely depending on location, and they can even change within states. Here’s how you can locate the FHA loan limits in your area and why it matters.
How to Locate FHA Loan Limits in Your Area
To find local FHA loan limits, you can visit the HUD website or use online tools provided by FHA-approved lenders.
Simply input your state and county, and you’ll find the specific limits for single-family homes, multi-family properties, and high-cost versus low-cost areas.
It’s also helpful to contact your mortgage lender for more up-to-date information.
How Location Affects FHA Loan Limits
Location plays a huge role in determining FHA loan limits. High-cost areas, such as parts of California, Florida, Hawaii, Alaska, and the Virgin Islands, often have higher FHA limits due to elevated real estate prices.
On the other hand, low-cost areas may have significantly lower FHA loan limits to align with local property values.
Examples of FHA Loan Limits by Region
For instance, in 2025, the FHA loan limit for a single-family home in Los Angeles County, California, is $1,209,750, reflecting the area's high property values.
In contrast, many counties in Alabama have a standard FHA loan limit of $524,225 for a single-family home.
Understanding these regional differences is crucial, especially if you're looking to buy in a high-cost area and want to avoid potential surprises during the loan application process.
How FHA Loan Limits Work
FHA loan limits are updated yearly to reflect changing home prices and economic conditions. The limits vary across the U.S., ensuring FHA loans are accessible to buyers in both high- and low-cost areas.
This approach keeps FHA loans competitive, especially as mortgage loan limits adapt to market shifts.
Factors that Determine FHA Loan Limits
Several factors go into setting FHA mortgage limits, such as the median home price in each region and the conforming loan limit set by the Federal Housing Finance Agency (FHFA).
The FHA works with agencies like Freddie Mac and Fannie Mae to align FHA limits with market needs, ensuring a fair range for borrowers. The FHA mortgage limits consider both one-unit properties and larger, multi-unit properties, making them accessible to a large pool of homebuyers.
Annual Updates to FHA Loan Limits
FHA loan limits are reviewed annually to stay current with shifts in the housing market. Rising property values in certain areas often mean FHA loan limits need to increase, helping borrowers remain competitive in high-demand markets.
FHA Loan Requirements
Knowing the requirements for an FHA loan is essential for anyone looking to qualify. These criteria cover credit scores, income levels, and other key factors.
What Credit Score is Needed for an FHA Loan?
Borrowers will typically need a minimum credit score of 500 for an FHA loan. To qualify for the lowest down payment options, a score of 580 or above is usually required.
This flexibility in credit score makes FHA loans appealing to potential homeowners working on building or improving their credit, helping more individuals achieve homeownership.
The FHA’s leniency compared to conventional loan requirements is one reason it remains a popular loan type.
Income and Debt-to-Income Ratio (DTI)
FHA lenders look at both income and DTI ratios to determine a borrower’s ability to handle loan obligations. A DTI of 43% or lower is ideal, though other factors can lead to more flexibility.
Employment History Requirements
Borrowers must show steady employment for at least two years to reassure the lender of reliable income. Consistent employment history strengthens a borrower’s application and showing stability is crucial to getting a FHA approval.
Down Payment Requirements
One significant benefit of FHA loans is the low down payment requirement. Depending on credit score, qualified borrowers could secure a home with a down payment option as low as 3.5%.
This is particularly appealing to first-time buyers who lack the savings for a larger down payment. Also, both one-unit and multi-unit properties may qualify, opening up more homeownership options.
Advantages of FHA Home Loans
FHA home loans offer many advantages, making this loan type a preferred choice for first-time buyers and those with low to moderate incomes.
Lower Credit Score Requirements
FHA loans make it easier for individuals with low to moderate credit scores to secure a home loan, opening doors to homeownership for a larger group.
Flexible Down Payment Options
With FHA loans, you can qualify with a low down payment, which may even be supplemented by down payment assistance programs if you qualify.
Competitive Interest Rates
Interest rates for FHA loans are often competitive, even for borrowers with lower credit scores, which makes them more affordable over the loan’s lifespan.
Assumable Loan Feature
FHA loans are assumable, meaning a buyer could take over the seller’s loan. This feature can be attractive when mortgage rates are high, providing potential savings.*
Are There Downsides to FHA Home Loans?
While FHA loans have many advantages, there are also a few downsides to consider.
Mortgage Insurance Requirement
One downside to FHA loans is the mandatory mortgage insurance premium (MIP). Borrowers must pay MIP upfront and as part of their monthly payment, which can increase costs.
Lower Loan Limits
FHA loans often come with lower limits than conventional loans, which may limit home-buying options in pricier areas.
Property Eligibility Restrictions
FHA loans can only be used for primary residences, meaning they aren’t ideal for investment properties or second homes.
Increased Overall Borrowing Costs
With mortgage insurance and other fees, FHA loans may have higher overall costs than conventional loans over time. Weighing these costs against the benefits is crucial.
How to Apply
With FHA loan limits and requirements in mind, taking the next step toward homeownership is simpler than ever.
Rate’s Same Day Mortgage gets you fast-tracked, giving you a solid budget and stronger negotiating power when you find the right home.
By completing a quick online application, you can get pre-approved the same day and move confidently toward closing on your dream home. Don’t wait—secure your path to affordable homeownership with Rate today.
*Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Rate, Inc. for current rates. Restrictions apply.
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