The FHA has a maximum loan amount that it will insure, which is known as the FHA lending limit. If you are looking to buy a house that exceeds this limit, you are required to pay the difference as your down payment.
These limits are calculated and updated annually. They are influenced by the conventional loan limits set by Fannie Mae and Freddie Mac, as well as the type of home (such as single-family or duplex) and the county where the home is located. The location can have as significant difference and sometimes influences homebuyers where to shop for a home. Within California, for example, the FHA loan limit in some counties is more than double what it is in others. This is because some counties have limits set at 65% of the national conforming limit while other high-cost counties have them set at 150%.
Take note that these limits do not include the amount of the Up Front Mortgage Insurance Premium, which may be financed into the loan or paid in cash depending on the borrower’s preference. The entire amount must be paid in cash or be rolled into the loan.