At the end of November, we reported that federal housing officials were increasing the conforming loan limit for Seattle and most other cities across the U.S. We also mentioned that HUD officials would follow suit with a similar announcement of their own.
That announcement came on December 14, when HUD said it would be increasing FHA loan limits in 2019. This is good news for borrowers who plan to use this program to buy a home next year.
New FHA Loan Limit for Seattle Area: $726,525
In the Seattle area, the FHA loan limit for a single-family property will go up to $726,525 in 2019. This figure applies to all of King, Pierce and Snohomish counties. Those three counties will have higher loan limits than the rest of the state, due to higher home values across the Seattle area. All other counties in Washington will have lower limits in 2019.
FHA loan limits went up for most counties in Washington. The only four counties in the state that will not see an increase next year are Chelan, Clallam, Douglas and Jefferson. In those areas, the 2018 cap will be carried over to 2019, unchanged.
To quote the HUD press release from December 14:
“The Federal Housing Administration (FHA) today announced the agency’s new schedule of loan limits for 2019, with most areas in the country to experience an increase in loan limits in the coming year.”
The new limits will apply to FHA loans with case numbers assigned on or after January 1, 2019, and they will remain at that level through the end of the year. (These limits are typically reviewed at the end of each year, and adjusted when rising home prices warrant it.)
As of December 2018, the median home value in Seattle was around $733,000. That’s pretty close to the new FHA loan limit for 2019. This means roughly half of all homes in the area were priced less than the new limit, while the other half were valued above that level.
Fast Facts: How This Mortgage Program Works
We’ve written about the FHA loan program a lot over the years. Here’s a quick recap of the salient points from those other articles:
- The Federal Housing Administration insures these loans against default-related losses. While this insurance primarily protects the mortgage lenders that generate the loans, it also results in flexible qualification requirements for borrowers.
- FHA loans require a minimum down payment of 3.5%. This appeals to borrowers with limited funds in the bank, including many first-time buyers. But the program is not limited to first-time buyers.
- This program requires borrowers to pay mortgage insurance premiums. While conventional (non-FHA) loans also require mortgage insurance in low-down-payment situations, it can be canceled when the homeowner reaches a certain equity level. The annual insurance premium for FHA loans, on the other hand, typically has to be paid for the life of the loan.
- The The Federal Housing Administration has congressionally mandated limits as to the size of loans it can insure. These FHA loan limits vary by county and are reviewed every year in relation to home prices.