Understanding Atlanta’s FHA Loan Limits in 2023

The Federal Housing Administration’s loan limits determine the maximum amount you can borrow with an FHA-insured mortgage in Atlanta and elsewhere in Georgia. FHA loans allow buyers to purchase a home with a low down payment, making them popular especially for first-time homebuyers. Knowing the FHA loan limits can help you determine if an FHA loan is right for your Atlanta area home purchase.

What are FHA Loans?

FHA loans are government-insured mortgages that require lower down payments and credit scores compared to conventional loans. The down payment is typically 3.5% of the purchase price. FHA loans are issued by private lenders but insured by the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development (HUD). If the borrower defaults, the lender can file a claim to have the loan covered by FHA insurance.

Why Do FHA Loan Limits Exist?

FHA loan limits restrict the maximum loan amount the FHA will insure for a given area. Loan limits vary by county and are typically higher in more expensive markets. The baseline 2023 national FHA loan limit for a single-family home is $367,000. Higher cost areas like Atlanta have higher limits that are set based on local home prices.

FHA loan limits protect the insurance fund from very large claims in expensive markets. They also aim to focus FHA lending toward low- and moderate-income borrowers. Higher limits in expensive counties allow more access while still capping maximum loan sizes.

What Are the 2023 FHA Loan Limits for Atlanta?

For a single-family home in Atlanta, the 2023 FHA loan limit is $649650. That’s the maximum amount you can borrow with an FHA loan. Here are the limits for other property types in Atlanta

• Single Family: $649,650
• 2-Unit: $831,600
• 3-Unit: $1,001,950
• 4-Unit: $1,243,800

These limits apply to properties located within Fulton County. Limits can vary by county within a metro area.

FHA Loan Limit Factors

FHA loan limits are calculated based on home values and wage indices in local markets. Here are some factors that determine a county’s FHA loan limits:

• Median home prices – Counties with higher median sales prices have higher FHA loan limits. The 2023 Atlanta FHA limit reflects high local home values.

• High-cost designation – Some high-cost counties get even higher limits than typical for their median prices. For 2023, Fulton County has “high cost” status.

• Number of units – FHA loan limits increase for 2- to 4-unit properties which cost more than single-family homes.

• Statutory ceilings – Regardless of home values, FHA limits cannot exceed a maximum amount set by Congress.

• Floor – All FHA limits must be at least 65% of the baseline loan limit for the U.S., which is $367,000 for 2023.

Atlanta FHA Loan Limit History

FHA loan limits usually rise year to year based on home price appreciation. Here are the FHA loan limits for a single-family home in Atlanta over the past five years:

• 2023: $649,650
• 2022: $597,000
• 2021: $548,250
• 2020: $510,400
• 2019: $484,350

In just four years, the Atlanta FHA loan limit has risen by 34%. Higher limits allow more homebuyers to utilize FHA financing to purchase homes in Atlanta’s hot housing market.

Using an FHA Loan in Atlanta

The high FHA loan limits in Atlanta make FHA loans a viable option even for some expensive properties. For example, the $649,650 limit goes quite far relative to median sale prices:

• Fulton County: $390,000
• Dekalb County: $330,000
• Cobb County: $415,000

Of course, you can spend up to the FHA limit, buy a less expensive home, or buy a home that needs fixes with renovation financing. The 3.5% down payment makes FHA especially attractive to first-time buyers without much cash.

To use an FHA loan, the property must appraise for at least the loan amount. And you’ll need to meet all FHA loan requirements for credit score, debt ratios, and down payment funds.

Alternatives to High Balance FHA Loans

Once loan amounts exceed $510,400 in Atlanta, you enter the realm of “high balance” FHA loans. These jumbo FHA loans have an extra 0.25% mortgage insurance premium added to the regular 1.75% MIP rate.

If you qualify for conventional financing, you may get lower rates borrowing above $510,400. Or consider a 10% down jumbo loan up to $970,800. Of course, make sure you actually need such a large loan before taking on higher costs.

The Bottom Line

FHA loan limits determine the maximum loan size in a given county. Atlanta enjoys high limits that accommodate expensive properties. Check the FHA loan limits for your county before applying for an FHA mortgage. Make sure this government-insured financing makes sense for purchasing your dream home.

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