12/18/2025
Higher limits on FHA loans give single-family homebuyers more flexibility in 2026
'This gives an opportunity for borrowers to get a more preferential rate or more options than they could otherwise find.'
By Madeleine D'Angelo
December 17, 2025
8:46 AM ET
As home prices continue to rise, government agencies are raising loan limits for 2026, providing buyers and sellers with a snapshot of what the nation’s housing market might look like in the new year.
The U.S. Federal Housing Finance Agency raised its 2026 conforming loan limits by $26,250 to $832,750 in November, and the U.S. Department of Housing and Urban Development’s Federal Housing Administration increased its forward mortgage loan limits for 2026 this month. It’s a similar story to what happened last year, when the federal agencies raised their limits for single-family mortgages to help support the nation’s buyers.
“The limits move every year in relation to home price increases,” explained Jason Obradovich, chief investment officer at lender New American Funding. “So, it really just moves with the tide; it’s not necessarily like [homebuyers] have more buying power. The way I look at it, they’re more able to get a better rate on homes.”
These FHA government-backed loans can help lower-income buyers or those with lower credit scores afford to purchase a single-family home. The FHA sets “floor” and “ceiling” loan limits based on the FHFA’s national conforming loan limit:
Property size Low-cost area “floor” High-cost area “ceiling”
One unit $541,287 $1,249,125
Two units $693,050 $1,599,375
Three units $837,700 $1,933,200
Four units $1,041,125 $2,402,625
In short, the annual adjustment provides more buyers with the opportunity to compete in today’s tight housing market.
“This gives an opportunity for borrowers to get a more preferential rate or more options than they could otherwise find,” Obradovich said. “It’s not necessarily like they raise the limit now you can go buy more houses,” he detailed, but it gives buyers the opportunity to shop in higher-cost markets or maybe get loans approved at a bank where they might’ve otherwise been denied.
For 2026, the FHA loan limits will increase in all but 10 U.S. counties, where they decreased. Generally, Obradovich noted, those are areas that didn’t see home prices appreciate quite so much.
But Obradovich cautioned buyers that loan limit increases aren’t a guarantee of market conditions. In short, they are not investment advice; they are guidelines.
“Even though the loan limits have gone up, it’s not an indication, necessarily, that home prices are going to continue to go up,” he said. “It really depends on the individual market.”
Higher loan limits also matter for sellers, Obradovich said. “As a seller, you should also think about the fact that there might be more qualified buyers who could buy a home that you might be selling.”
That bigger buyer pool might mean more demand, he said.
