Summary: In 2017, the maximum FHA loan size for Denver, Colorado and the surrounding metro area is $493,350. That’s slightly higher than the area’s median home price, as of spring 2017. Read on to learn more about this unique mortgage program.
Federal Housing Administration (FHA) loans are one of the most popular financing options for home buyers in the Denver metro area. First-time buyers, in particular, flock to this program. A recent industry analysis showed that nearly three-quarters of all FHA loans that were generated in 2016 went to first-time buyers.
The minimum down payment is one of the most appealing features. Denver-area home buyers who use an FHA loan to buy a house can put down as little as 3.5% of the purchase price. Conventional mortgage loans often require more money down.
But there are limits to how much you can borrow when using this program. Here’s what you should know about the maximum loan amounts for Denver.
Maximum FHA Loan Amount for Denver: $493,350
The Federal Housing Administration falls under the Department of Housing and Urban Development (HUD). So all of the loan requirements are established by HUD, and that includes the maximum amounts. These “loan limits” vary by county because they are derived from median home prices.
In 2017, the maximum FHA loan amount for Denver, Colorado is $493,350. That’s for a single-family home purchase. There are higher limits for multi-family properties, the kind that are often purchased by investors.
Here are the maximum loan limits for all property types:
- One-family: $493,350
- Two-family: $631,550
- Three-family: $763,450
- Four-family: $948,750
These figures apply to the entire Denver-Aurora-Lakewood metro area, including the following counties: Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park.
Average Home Prices as of Spring 2017
There’s an important distinction to be made between (A) the maximum FHA loan amount for Denver, and (B) the purchase price of the home you are buying. It’s possible to buy a house that exceeds the limits shown above, as long as your down payment makes up the difference.
According to the Denver Metro Association of REALTORS, the average selling price for homes and condos in the area rose to $439,161 in April 2017. That was 10.53% higher than the same month last year, but still lower than the maximum FHA loan size for the Denver area. This means that home buyers who use this program should have plenty of properties to choose from, while staying at or below the FHA limit.
Is It the Right Mortgage Program for You?
All types of mortgage loans have certain pros and cons, and that goes for the Federal Housing Administration’s insurance program as well. Choosing the right financing option requires a thorough understanding of loan features and requirements.
As mentioned earlier, Denver home buyers who use an FHA loan can put down as little as 3.5%. That’s the minimum investment required by HUD. Even better, these funds can be gifted to the buyer from a third party, such as a family member. FHA also offers a streamlined refinancing program, which could be useful down the road if you decide to refinance your home.
Borrowers who use this program have to for mortgage insurance. It’s required on all FHA purchase loans. This can increase the size of your monthly payments. But it’s a trade-off. This insurance is what makes the FHA mortgage program possible in the first place. Without it, borrowers wouldn’t have access to such a flexible, low-down-payment financing option.