2021: FHA Loans Re-Defined

Dated: December 11 2020

Views: 98

2021: FHA Loans Re-Defined

The year is already coming to an end and real estate could not be more interesting and obtainable. Despite the horrors of what 2020 had to offer, 2021 promises new beginnings and big opportunities. With that being said, despite the pandemic and all the constraints and restrictions it left, real estate has become even more desirable. Many people have questioned decisions and moved forward with big real estate plans this year alone. The new year will be no different, for the first quarter of 2021, we may be able to see a massive surge in potential real estate clients and buyers. The question that has been unanswered since February is why, why would people invest in real estate at a time like this? The answer is, why not? This year has proven that life should not be taken for granted and investing in the real estate industry is a very wise move. 


A big leap that the Federal Housing Administration (FHA) will take in 2021 is the increase of FHA loans both in “floor” areas (low-cost areas) as well as “ceiling” areas (high-cost areas). The news came as a surprise to many in the industry that the FHA would make such a bold move. However, this move is strategically important because the FHA sees this as an opportunity to be able to help more people obtain higher loans to cover mortgages. The more people the FHA approved for housing loans, the more people would be interested in purchasing homes. The great thing about this increase is that it actually helps those people who have shelved ideas and notions of ever buying a home. Indeed, what a great way to start the year. 


A little background on this increase is that we can see a pattern that the FHA has been continuously increasing FHA loans year after year. Last year the minimum national loan limit for FHA was $331,760. For 2021 it is projected to increase by $25,000 more than the current limit. The FHA has also increased the loan limit for the 65-high cost counties across America to a whooping $822,375 from $765,600. That is a huge increase of about $57,000. 


In 2019, the FHA loan limits were increased in 3,053 counties. For 2021, the FHA determines that 3,108 counties will receive an FHA loan increase. With this increase in loan limits, more opportunities open up for buyers who were second-guessing their decision in purchasing due to low loan limits. Although, 125 counties will have FHA loan limits that will remain unchanged. The great thing about this is that the FHA does not plan on decreasing loan limits for any county. They will either increase or remain the same. 


The Federal Housing Administration is not the only sector that has made this bold move of increasing loan limits, federally-backed mortgage companies such as Fannie Mae and Freddie Mac have made the same initiative. They have increased their national conforming loan limit to $548,250. 


The FHA sees this as an opportunity to serve more people attain their dreams better. This is pretty good news to all home buyers out there who have not taken the chance to move forward yet. The beginning is here and whether it’s FHA loans or other mortgage company loans, the best it yet to come. 


With all these loan limit increases, real estate companies become more eager to welcome the new year. The opportunities and the stakes are higher than ever before. We are entering 2021 with a promise that the past year may have been a year wherein plans changed and real estate opportunities were put on hold, but the new year brings new light to a better future. 

Stephanie Woods, Associate Broker

REALTOR®, SFR, CDPE, rCRMS specialist, NRBA, RDCPro, NAREB, NFSTI Certified REO Specialist


Better Homes and Gardens Real Estate BloomTree Realty

102 W Gurley St #102 • Prescott, AZ 86301

Cell: 928-308-8565

Office: 928-237-4435



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