FHA Loan Limits In Texas For 2021
FHA loans provide great incentives for future Houston homeowners Learn about the Texas FHA loan and how you can qualify
Whether you’re a first time home buyer or an expirenced buyer, FHA loan limits in Texas may affect whether you decide to apply for an FHA Loan.
It is a great time to be looking for an FHA loan! FHA loan limits went up at the beginning of 2021. Now is the time to take advantage of these higher loan limits when purchasing your new home.
What are FHA Loans?
FHA loans provide an alternative path to homeownership through loans that are insured by the Federal Housing Administration. These loans are administered by FHA-approved lenders across Texas. Approved lendors include banks, credit unions, and a growing list of online lending companies.
FHA loans make homeownership more accessible by lowering the credit score limits required to gain approval. The loans also decrease the required down payment compared to traditional loans.
The FHA backs or insures the loan to protect the lender if the borrower defaults on the loan. This means you may be able to get an FHA loan even if you don’t qualify for a conventional loan.
Variable FHA Loan Limits
FHA loans have strict limits based on the county where the home is located. The FHA adjusts how much a buyer can borrow based on the cost of real estate in each county.
The FHA determines loan limits by taking the median home price in a county and multiplying it by 115%. This number is compared against the the FHA’s loan scale.
In Texas, for example, if you’re buying a home in Austin in Travis County, the higher cost of living allows for a variable loan limit of $416,300. If you’re buying a home in El Paso, Texas, in the county of Hudspeth with a lower cost of living, the FHA loan limit shrinks to $355,362.
In general, current FHA loan limits range from a standard tier of $355,362 to a mid-range tier maximum of $822,375, depending on where you’re buying a home.
Many counties also fall within the mid-range category somewhere between the two extremes.
Multi-Family FHA Loan Limits
The Federal Housing Administration also provides loans for multi-family real estate properties, including 2-unit, 3-unit, and 4-unit properties.
Loans are not available for financing properties with more than four units or real estate that could be categorized as investment properties.
Multi-family limits on loans range from $456,275 for a 2-unit property in a low-cost county to $1,581,750 for a 4-unit property in a high-cost county.
Similar to single-family limits, the FHA provides special loan caps for the same exception areas of the country with higher median values. These caps range up to $2,372,625 for a 4-unit property.
Don’t see the county where you’re looking to buy a home listed above? You can find the FHA home limits for every county on the FHA website
Exception Loan Limits
Several areas of the country have such a high cost of living that the FHA has developed exception loan limits. Exception loan limits make up for the higher average real estate costs.
Exception loan limits can reach as high as $1,233,550 and are found in Hawaii, Alaska, the Virgin Islands, and Guam.
Qualifying for an FHA Loan
While FHA loan limits have increased in Texas, the requirements for qualifying have not. A potential buyer with a credit score of at least 500 can qualify. However, those with credit scores of 580 or better will be eligible for down payment costs of as little as 3.5% versus 10%.
Other buyer qualifications still apply, including a debt to income ratio of less than 43%, proof of employment, and a steady income showing your ability to make the required loan payments each month.