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FHA Loan Limits In California

The Federal Housing Administration (FHA) issued their 2021 fha loan limits in California and the good news for homeowners is that they’ve increased their California FHA loan limits for most areas. The FHA increase in loan limit size is a big win for homeowners in California as it will open the door to additional opportunities for many current and potential homeowners.

As it’s been reported in the news; we’ve seen significant jumps in California housing prices over the last 12 months and because of this FHA is able to raise their floor and ceiling loan limits.

Here Are The 2021 California FHA Loan Limits

  • $356,362 – most counties
  • $822,375 – this is the new limit for high cost counties

The FHA loan limit increase will open the door to more California homeowners that want access to the FHA loan program. These limits apply to purchase and refinance transactions throughout the state of California.

FHA loan limit in California

FHA Nationwide:

The FHA nationwide increase is from the previous level of $331,760 to $356,362 is over a $20,000 increase. In high cost areas the FHA loan limit goes from $765,600 to $822,375 – that is an increase of over $55,000.

This increase will allow California homeowners new opportunities and should help keep housing stable. All-time low mortgage rates in 2020 helped home sales and that looks to continue into 2021.

The most popular Federal Housing Administration loan program is the 30 year fixed rate loan program and the 15 year fixed rate loan program and those will continue to be offered in 2021.

Why the increase?

According to the Federal Housing Finance Agency (FHFA) their home price index increased 8% over the previous year’s measurement. The strong housing market in 2020, helped by decreasing interest rate, pushed values higher which allowed the limits to be raised. Every year FHFA announces an update to loan limits; some years it increases and some years it remains flat.

If you’d like a county by county breakdown (for each state) then check out the easy-to-use search function on HUD’s website. Before raising the FHA loan limits; the Federal Housing Finance Agency raised conforming loan limits across the country from $$510,400 to $548,250. That is a sizable increase and it ultimately will help thousands of homeowners in California.

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Updated California FHA Mortgage Rates

Here are the latest FHA mortgage rates in California. If you have any questions or would like a quote please contact us directly at 1-800-550-5538 or use one of our contact forms.

FHA Mortgage Rates

Higher Loan Limits and Higher Mortgage Rates

If you like in one of the high cost counties and want a FHA loan amount between $356,362 and $822,375 you are going to pay a higher interest rate than someone who has a loan amount at or below $356,362. The process and general qualifications are the same but the interest rate is higher.

How much higher?

It mostly depends on the market but generally speaking your interest rate is going to be between 0.125% and 0.375% higher than those with a loan amount at or below $356,362.

As it’s been reported in the news; we’ve seen significant jumps in housing prices over the last 12 months and because of this FHA is able to raise their floor and ceiling loan limits.

Here Are The 2020 California FHA Loan Limits

Below are the California FHA loan limits for 2020:

  • $331,760 – most counties
  • $765,600 – this is the new limit for high cost counties

The 2019 FHA loan limits in California were $314,827.00 ($726,525). And in 2018 it was $294,515 ($679,650).

A Great Option For Some Homeowners

A FHA loan is not for everyone however it does provide an opportunity for thousands of Californian’s every year to either refinance their current mortgage or purchase a new home.

FHA loan programs typically come with lower rates (compared to conforming loan programs) however they do come with Mortgage Insurance (MI). More on what Mortgage Insurance is below.

Mortgage Insurance:

Do you know FHA loans come with Mortgage Insurance?

Mortgage Insurance (MI) is not homeowners insurance. Mortgage Insurance is an insurance policy that you pay each month (along with your mortgage payment, property taxes, and property insurance) that protects the lender in case you default on your loan.

While no one wants to pay an extra payment each month; the FHA loan program does open the door to new opportunities for those with less than perfect credit, high debt-to-income ratios, and/or low downpayment.

The program is not perfect but is great for certain current and potential homeowners. All FHA loan limits in California, standard and high cost, are subject to Mortgage Insurance – no exceptions.

There is also an Upfront Mortgage Insurance Premium that is paid at the time of closing. The payment is one lump sum and is either added to the loan or the interest rate is increased to cover the cost. For more information about Mortgage Insurance and FHA loans in general please be sure to check out our FHA home loan guide.

Paying Off An FHA Loan:

When you go to payoff a FHA loan, under the old FHA loan limits in California and the new limits for 2021, you’ll owe daily interest. Unlike Conforming loans, you’ll owe daily interest for the entire month no matter what day you close. For Conforming loans, you’ll only owe interest to the day your loan is paid off.

So if you are selling your home or if you are refinancing your current mortgage, and you have a FHA loan, you’ll want to close and payoff the original FHA mortgage at the end of the month (rather than the first few weeks).

Interested In Conforming Loan Limits?

Some homeowners are looking for Conforming Loan Limits and there are additional opportunities for homeowners under Fannie Mae or Freddie Mac lending guidelines. As mentioned above the ceiling for conforming loan amounts was also raised recently and this should help the housing market in 2019.

At JB Mortgage Capital, Inc. we offer low FHA mortgage rates and one-on-one personal service. If you are looking for a new FHA mortgage please be sure to give us a call at 1-800-550-5538 or send us a message from our website.

Loan Officer Kevin O'Connor

About The Author

Loan Officer Kevin O'Connor has over 16 years of experience as a Mortgage Loan Originator and is licensed with the state of California and the Nationwide Mortgage Licensing System. He has a top rating with the Better Business Bureau, Google, Yelp, and Zillow. CA DRE #01499872 / NMLS #247447

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