FHA Loan Limits Increase to $524,225 for 2026 Baseline

The Federal Housing Administration raised the baseline FHA loan limit to $524,225 for 2026, an increase of 4.5% from the $501,275 ceiling in effect for 2025. The agency announced the new limits on December 19 with an effective date of January 1, 2026. The ceiling for designated high-cost areas rose to $1,209,750, up from $1,151,425.

The limits apply to FHA-insured single-family mortgages and are recalculated annually based on conforming loan limits set by the Federal Housing Finance Agency. The baseline represents 65% of the new conforming limit of $806,500 that Fannie Mae and Freddie Mac will also purchase in 2026.

Joseph Pigg, senior vice president at the Mortgage Bankers Association, called the increase "meaningful for first-time buyers in middle-tier markets." Pigg said the higher limit allows FHA borrowers to pursue homes in the $450,000 to $524,000 price range that had been crowded out by private mortgage insurance economics at conventional programs.

FHA endorsements totaled 732,000 loans in fiscal year 2025, down 6% from the prior year. First-time buyers accounted for 82% of FHA purchase volume, per HUD's annual report to Congress. The average FHA borrower carries a credit score of 670, compared with 753 for Fannie Mae conventional borrowers and 754 for Freddie Mac.

High-cost designations cover a mix of metropolitan areas where local median prices substantially exceed national norms. These include the San Francisco Bay Area, New York City, Honolulu, Los Angeles, and Washington, D.C. The high-cost ceiling applies in roughly 100 counties nationwide.

A geographic middle tier of counties received in-between limits calibrated to local home-price data. HUD set limits for 3,234 counties, with 2,957 at the baseline, 188 at intermediate tiers, and 89 at the high-cost ceiling.

The National Association of Realtors welcomed the adjustment. "Every year the limits lag the underlying price movements by several months, but the annual adjustment helps keep FHA a functional option for first-time buyers," said Kevin Sears, president of NAR. Sears added that rising annual mortgage insurance premium reductions implemented in 2023 continue to make FHA more competitive with conventional loans for borrowers below the 680 credit score threshold.