FHA loan limits

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Have recently had a lot of buyers interested in using FHA loans. We’ve discussed why this is a difficult time to get these loans done before. But, obviously, being able to buy an apartment building with 5% down is pretty appealing. So I thought I’d post a quick FHA refresher.

FHA is a program for first time home buyers. Because the government considers 2-4 unit properties “residential”, as opposed to commercial, they qualify as well. Because of the incredible leverage you get from FHA (basically, put down 5% of the purchase price and borrow 95%), FHA can be incredibly attractive. But, obviously, the more leverage you use, the more risk you’re taking on, since leverage magnifies outcomes.

With that caveat, here are the maximum loan sizes for FHA loans in Southern California:

  • Single family home: $729,750
  • Duplex: $934,200
  • Triplex: $1,129,250
  • Fourplex: $1,403,400

Remember, this isn’t even the maximum price you can pay; it’s the maximum loan size. To get the maximum amount you can pay, just divide each of the above numbers by .95. So the maximum prices you can pay for FHA deals in Southern California are:

  • Single family: $768,158
  • Duplex: $983,368
  • Triplex: $1,188,684
  • Fourplex: $1,477,263

As you can see, the maximum loan limits are very high. There are few, if any, deals west of La Brea that you couldn’t do FHA, in theory. The problem, of course, is getting sellers and brokers to believe you can close. But that’s a topic for another day.

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