LOVELAND – Each year, FHA updates loan limits for mortgages insured by FHA. Buyers intending to use an FHA loan for an upcoming home purchase should be aware of what the new loan limits are as it could affect their home purchase plans.
Why loan limits change
As the market changes over time, FHA tries to remain current. Their loan limits reflect market conditions and the average selling price of homes. Each year, they re-evaluate average selling prices and adjust their limits based on a pre-determined formula. In stable markets, loan limits may not actually change from year-to-year. If home prices increase, FHA loan limits are likely to do so as well.
2016 loan limits
Average selling prices typically vary based on the type of property, so FHA loan limits are specific to property type.
The 2016 loan limits are as follows:
Single Family: $458,850
Two Family: $587,400
Four Family: $882,400
NORTHERN COLORADO AREA
Single Family: $340,400
Two Family: $435,750
Four Family: $654,600
What this means for home buyers
For both Northern Colorado and Denver, the loan limits actually increased quite a bit. It increased by over $34,000 for the Denver area and $40,000 for the Fort Collins area. If your purchase price was previously restricted because of the maximum FHA loan limits, then you should check with your lender. You may be able to qualify for a higher amount. This can be a big help if you were having trouble finding a home within the previous price range and/or were not able to effectively compete for homes due to bidding wars.
Suzanne Plewes is a Broker Associate at RE/MAX Alliance in Loveland. If you have questions regarding real estate, please write to 750 W. Eisenhower Blvd., Loveland, CO 80537, call 970.290.0373 or e-mail firstname.lastname@example.org.