What are the new FHA loan limits for 2021?

There isn’t much the coronavirus hasn’t impacted in the real estate market – from loan rates to inventory. In response to the escalating home prices seen in 2020, the Federal Housing Administration is now offering higher loan limits on FHA loan products in the new year.

FHA loans are a type of mortgage loan backed by the Federal Housing Administration. These types of loans are particularly popular with first-time home buyers, as FHA loans allow down payments as low as 3.5%, and the qualification criteria are less strict when compared to other types of mortgage loans.

FHA loans are provided by traditional lenders, not the Federal Housing Administration. Rather, since the FHA “guarantees” these loans, banks can lower their qualification criteria to potential borrowers who would otherwise be deemed as “high risk” for more traditional loan products.