FHA Loan Limits 2025—How Much Can You Borrow? Find Out Now

In 2025, the average home price in the US has jumped to around $356,585. This rise makes it harder for many to own a home. As affordability concerns mount, buyers must familiarise themselves with Federal Housing Administration (FHA) loan limits.

With tight loan limits, securing a private mortgage loan has been difficult, but the FHA has made it easier by raising its limits. As a result, home buying has become much easier with these higher FHA loan limits.

Borrowers with a 580+ credit score need 3.5% down, while those with 500-579 scores need 10%. This blog will explore the updated FHA loan limits. It will cover how they are set and their benefits for homebuyers in today’s housing market.

FHA loan limits establish the maximum amounts a borrower can access through an FHA-backed mortgage. They vary by location and property type. The FHA sets distinct thresholds for low-cost and high-cost areas:

• Low-Cost Areas: The baseline limit is 65% of the conforming loan limit, which is $524,225 for a one-unit property in 2025.

• High-Cost Areas: The ceiling limit is 150% of the conforming loan limit, permitting loans up to $1,209,750 for a single-family home.

These limits are reviewed annually by the U.S. Department of Housing and Urban Development (HUD). FHA loans provide access for buyers who struggle with conventional loans due to lower credit scores or smaller down payments.

FHA loan limits are determined yearly using a formula based on local housing prices. The process involves looking at median home prices in counties and Metropolitan Statistical Areas (MSAs). The FHA adjusts these limits accordingly, using data from the U.S. Department of Housing and Urban Development (HUD).

Key factors influencing the determination of FHA loan limits include:

• Median Home Prices: The FHA calculates limits based on 115% of the median home price in each area.

• Conforming Loan Limits: The Federal Housing Finance Agency (FHFA) sets a national conforming loan limit. It is a benchmark for FHA loan limits.

This system ensures that FHA loans remain relevant and accessible in various markets nationwide.

The amount you can qualify for with an FHA loan depends on several factors:

• Credit Score: Borrowers with a credit score of 580 or higher may qualify for a down payment as low as 3.5%. Those with scores between 500 and 579 may need to put down at least 10%.

• Debt-to-Income Ratio (DTI): It's usually capped at 43%. Some lenders may allow higher ratios with compensating factors, like a strong credit history.

• Down Payment: A minimum down payment of 3.5% is required for most borrowers.

• Property Type: The maximum loan amount also depends on whether you are buying a single-family home or a multi-unit property.

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The amount you can qualify for with an FHA loan depends on several factors:

• Credit Score: Borrowers with a credit score of 580 or higher may qualify for a down payment as low as 3.5%. Those with scores between 500 and 579 may need to put down at least 10%.

• Debt-to-Income Ratio (DTI): It's usually capped at 43%. Some lenders may allow higher ratios with compensating factors, like a strong credit history.

• Down Payment: A minimum down payment of 3.5% is required for most borrowers.

• Property Type: The maximum loan amount also depends on whether you are buying a single-family home or a multi-unit property.

Need additional funds while keeping your FHA loan benefits? FHA cash-out refinancing allows homeowners to tap into home equity for financial flexibility.

In 2025, FHA loans and conventional loans set different borrowing limits. The FHA's standard loan limit, known as the "floor," is $524,225 for single-family homes in most areas. Yet, in high-cost regions, the limit increases to a "ceiling" of $1,209,750.

In comparison, conventional loans, regulated by the Federal Housing Finance Agency (FHFA), have a baseline limit of $806,500, also reaching up to $1,209,750 in high-cost areas. Thus, FHA loans generally offer lower limits in standard regions, while both types align on maximums in more expensive locales.

If you're exploring alternatives, VA loans offer a unique feature—assumability. Learn how VA loans compare to FHA loans and whether they suit your home-buying needs.

FHA loans offer several advantages that make them an attractive option for homebuyers in 2025. Here are some key benefits:

• Lower Down Payments: FHA loans require a minimum down payment of just 3.5% for borrowers with a credit score of 580 or higher. This lower barrier to entry makes homeownership more accessible, especially for first-time buyers.

• Flexible credit requirements: You can qualify with a minimum credit score of 500. This makes them a good option for people who might not get conventional loans. This inclusivity helps those with less-than-perfect credit secure a mortgage.

• Assumable Mortgages: FHA loans can be taken over by future buyers, which is a plus if interest rates go up. This feature lets buyers adopt the existing loan terms, possibly saving on interest costs.

• Mortgage Insurance Premiums (MIPs): FHA loans require MIPs. However, they may cost less than private mortgage insurance (PMI) on conventional loans, especially for those with low down payments.

Considering ways to lower your monthly mortgage payments? Discover how a recast mortgage can help homeowners reduce their loan balance without refinancing.

FHA loan limits also cater to special cases, meeting different borrower needs. For instance:

• Multi-Unit Properties: Borrowers looking to buy multi-unit properties can benefit from higher limits as well. For example, in high-cost areas, the limit for a two-unit property is $1,548,975. This allows investors and larger families to get the financing they need.

• Special Exceptions: Certain areas like Alaska and Hawaii have unique pricing dynamics due to geographic and economic factors. The FHA recognizes these conditions by offering higher loan limits tailored to these markets.

Applying for an FHA loan in 2025 involves 6 steps:

• Check Eligibility: You must meet the basic requirements. They include a minimum credit score of 500 and a debt-to-income ratio below 43%.

• Gather Documentation: Prepare necessary documents such as income verification (W-2s or pay stubs), tax returns, bank statements, and details about your debts and assets.

• Choose a Lender: Research lenders who offer FHA loans. It’s essential to compare rates and terms from multiple lenders to find the best fit.

• Complete the Application: Fill out the loan application with your chosen lender. Be prepared to submit all requested documents quickly.

• Loan Processing and Underwriting: After submission, your application will be processed and underwritten. This step typically involves verifying your financial details and assessing your eligibility based on FHA guidelines.

• Close the Loan: When approved, you’ll move to closing where you’ll sign documents and finalize your loan terms. Make sure to review all details carefully before signing.

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FHA loan limits are set annually based on median home prices in each county. They are adjusted to reflect changes in housing markets. This ensures accessibility for low- and moderate-income buyers.

Yes, FHA loans are designed for borrowers with lower credit scores. You may qualify with a score as low as 580 for a 3.5% down payment or 500 with a 10% down payment.

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Find the Perfect Mortgage for Your Dream Home with Be My Neighbor.

Compare options, calculate payments, and get expert guidance - all in one place.

Get Pre-approved