Changes to FHA loan limits for California and the rest of the country

In December 2014, the Department of Housing and Urban Development (HUD) announced the 2015 FHA loan limits for California and the rest of the country. There were no major changes. For the most part, last year’s FHA lending or loan limits will simply carry over to this year. Depending on where you live, this may be good or bad news due to average home prices.

High-cost areas: In counties with a relatively high median home price, the maximum loan size will remain the same as last year. The FHA mortgage or loan limit for these high-cost areas is $625,500. This includes San Francisco, Los Angeles, and several cities within Orange County.

Lower-cost areas: According to HUD, the 2015 “standard loan limits for areas where housing costs are relatively low will also remain unchanged at $271,050.” Twelve California counties fall into this “lower-cost” category, including Del Norte, Kern and Imperial counties.

California FHA Loan Limits by County, 2015

The table below shows the 2015 FHA loan limits for California counties.

Notes: The “1-family” column applies to standard, single-family homes. The “2-family” column applies to duplex-style properties that can accommodate two separate residents, and so on. FHA lending limits are assigned by county, which means all cities and towns within a particular county have the same caps.

Remember, these are the FHA loan limits for California. The amounts shown above specifically apply to mortgage loans that are insured by the Federal Housing Administration. There are separate lending limits for conforming conventional products (that are not insured by the federal government).

Some Counties More ‘FHA Friendly’ Than Others

For the most part, these are the same California FHA loan limits as last year. They were simply “rolled over” to 2015 with no major changes. Home prices, on the other hand, rose considerably in some California cities over the last year. As a result, a higher percentage of homes will exceed the maximum loan size for FHA.

For instance, the median home value in Orange County as of January 2015 was $626,000 (source: Zillow Home Value Index). The 2015 FHA loan limit for this county is slightly lower at $625,500, for the single-family category.
This means that more than half of all single-family properties are priced above the FHA mortgage cap, at least within the O.C. So many home buyers in this market will be shopping above the Federal Housing Administration’s lending limits.

This is true for many cities and counties in California.

In other parts of the state, however, median and average house values are well within HUD’s guidelines for maximum loan size. For example, the median home price in Kern is $167,700. The 2015 FHA limit for Kern County, California is $271,050, more than $100,000 higher than the median house value.

So it would be fairly easy to find a home within FHA lending limits in this area — especially when compared to those higher-priced markets where the median is at or above the limit.

What’s the Best Type of Mortgage for You?

When choosing a type of mortgage loan, home buyers need to consider more than just the lending limits. There are other pros and cons that must be weighed as well.

For instance, the FHA program offers a down payment as low as 3.5% of the purchase price or the appraised value (whichever is less). This appeals to California home buyers who have limited cash saved up for a down payment. The downside to this financing method is that it requires two types of mortgage insurance, which can increase the monthly payments and the total amount paid over the long run.

Disclaimer: This 2015 California FHA loan limits shown above were exported from the “Mortgage Limits” database tool on the Department of Housing and Urban Development website. Their information is deemed reliable but not guaranteed. This information has been provided for educational purposes only. For the most current and accurate information available regarding loan amounts, visit HUD.gov.