Function

• The Federal Housing Administration sets limits on the size of mortgages for which it will provide government-backed insurance for mortgage lenders. The maximum limit for an FHA-insured mortgage is dependent on the location of the property and the number of units in the property. FHA-insured mortgages are available for real estate purchases of one to four units.
  
  

Minimum Limits

• The FHA sets a lower limit or "floor" for insured mortgages. These are the maximum loan amounts in areas designated as low-housing-cost areas by the FHA. For 2010, the limits were:
  
  Single-family home: $271,050
  Two-family unit: $347,000
  Three-family unit: $419,400
  Four-family unit: $521,250
  
  

Maximum Limits

• The FHA also sets maximum insurable loan amounts for high-housing-cost areas. The FHA calls these numbers the high-cost-area "ceiling" limits. The 2010 ceiling limits were:
  
  Single-family home: $729,750
  Two-family unit: $934,200
  Three-family unit: $1,129,250
  Four-family unit: $1,403,400
  
  

Considerations

• Each housing area in the U.S. is given loan limits between the floor and the ceiling amounts by the FHA. For example, the single-family home FHA loan limit for Sacramento, California, is $580,000 for 2010. Linked in the Resource section is a Web page from the FHA Loan Center that allows you to look up a city or county and see the current FHA limits for that location.
  
  

Effects

• Most areas will have FHA loan limits between the high and low amounts. The number of areas that qualify for the highest limits are listed on two pages from the U.S. Department of Housing and Urban Development--HUD. The high-limit-housing areas are concentrated in California, New York, New Jersey and Virginia. The ceiling limits can actually be exceeded in very-high-housing-cost areas in Hawaii, Alaska, Guam and the Virgin Islands.