What are the FHA Maximum Mortgage Limits?

Maximum Mortgage Amounts on Purchases

The maximum mortgage that FHA insures will be equal to the home’s sale price or to the appraised value (if lower than the sale price) multiplied by a loan-to-value (LTV) ratio. The borrower will be responsible for having a cash investment equal to the difference in value between the sales price and the determined maximum mortgage amount. The minimum investment is 3.5%. Therefore, the maximum LTV for a purchase is 96.5%.

To meet the minimum 3.5% investment, the borrower may not use any closing costs (such as pre-paid expenses and discount points) towards the amount. While the borrower can use a credit card to pay for such costs as the appraisal and credit report, these expenses likewise cannot go towards the required investment.

Maximum Mortgage Amounts on Refinances

The maximum percentage for a refinance will be determined by the property’s occupancy status,  the way the proceeds from the loan are used, and the time and manner of the purchasing of the property. In general, the statutory limit is the maximum threshold for the mortgage amount unless an upfront mortgage insurance premium (UPMIP) is included with the loan.