Understanding the FHA Max Loan Amount in California for 2024

Buying a home in California can be an expensive endeavor, especially in competitive housing markets like Los Angeles, San Francisco, and San Diego. This is why many homebuyers turn to FHA loans, which offer more flexible qualifying guidelines and lower down payments than conventional mortgages. A key component of FHA loans is the max loan amount, which determines the highest mortgage amount the FHA will insure for a property. In this article, we’ll break down everything you need to know about the FHA max loan limits in California for 2024.

What Are the Basic FHA Loan Limits in California?

The Federal Housing Administration (FHA) sets mortgage limits each year based on the average home prices in counties across the country. For 2024, the FHA national floor is $498257 and the ceiling is $1149,825 for a single-family home. This means

• The lowest max loan amount for any FHA mortgage in California is $498,257. This floor applies to counties with lower home values.

• The highest max loan amount for a standard FHA loan is $1,149,825. This ceiling applies to counties with higher home values

These baseline limits apply to single-family homes with 1-4 units. FHA also sets higher limits for larger multifamily properties.

How Do the Limits Vary By County in California?

While $498,257 to $1,149,825 represents the FHA range statewide, the actual FHA max loan amount still depends on the specific county and property type. For example:

• In San Francisco County, the max FHA loan is $1,149,825 for a single-family home.

• In Imperial County, the max FHA loan is $498,257 due to lower home values.

• In Los Angeles County, the FHA limit for a 2-unit property is $1,476,750.

So make sure to verify the FHA mortgage limits in the specific county where you want to buy. The max loan amount can vary significantly from north to south and coastal versus inland.

What’s the Highest Possible FHA Loan Amount in California?

For high cost areas like San Francisco and parts of Los Angeles, the FHA limit of $1,149,825 is still low compared to median home prices. This is why the FHA also offers “high balance” loan amounts in certain counties.

High balance loans allow for maximum FHA financing up to $2,211,600 in select high cost counties like:

• Alameda County
• Contra Costa County
• Los Angeles County
• Orange County
• San Diego County
• San Mateo County

With a high balance FHA loan, you can finance up to 96.5% of the $2,211,600 limit with just 3.5% down. This increased loan amount makes FHA financing possible on more expensive properties.

Can I Finance 100% of the Purchase Price with an FHA Loan?

No, FHA requires at least 3.5% down on all of its mortgage products. This down payment comes directly from your own funds. However, the 3.5% minimum is significantly lower than the typical 20% down required for conventional loans.

And unlike conventional mortgages, the FHA allows down payment funds to come from gifts, grants, and other sources. FHA buyers can also roll closing costs into the mortgage amount. So out-of-pocket cash needed at closing is reduced.

What Types of Homes Are Eligible for FHA Financing?

FHA loans can finance:

• Single-family homes
• Duplexes
• Triplexes
• Fourplexes
• Townhouses
• Condominiums

Manufactured and mobile homes are also eligible if they meet certain requirements.

As an owner-occupant, you can use FHA financing to purchase and live in a 1-4 unit property. Non-occupying co-borrowers are also allowed. This flexibility makes FHA loans ideal for first-time homebuyers, move-up buyers, and real estate investors alike.

Can I Use an FHA Loan to Buy a Vacation Home or Investment Property?

No, FHA loans require owner-occupancy as your primary residence. You must move into the property within 60 days of closing and occupy it for at least 1 year. FHA does not insure loans for second homes or pure investment properties that you do not live in.

How Do FHA Loan Limits Compare to Conventional Loans?

The max loan amounts on FHA loans work differently than limits on conventional mortgages. Here’s how they compare:

FHA: Max mortgage amount is set by FHA county loan limits, up to a ceiling of $2,211,600 in high cost areas. You can finance up to 96.5% of this limit.

Conventional: No max mortgage amount, but typically capped at 80% loan-to-value without private mortgage insurance. Down payment is usually 20%.

The bottom line is FHA allows higher leverage with lower down payments. The trade-off is you have to pay mortgage insurance premiums. Conventional loans require more money down but let you avoid private mortgage insurance with 20% equity.

Can I Use FHA Financing to Buy Any Priced Home in California?

Due to the FHA loan limits, buyers should still look for homes priced under the FHA ceilings for their county. However, in high cost counties like San Francisco and Los Angeles, the high balance loan limits give you more purchasing power.

Here are a few examples of homes prices that align well with FHA financing:

• Inland Empire: $300,000 – $600,000
• Sacramento: $400,000 – $700,000
• San Diego County: $600,000 – $850,000
• Los Angeles County: $750,000 – $1,000,000
• San Francisco Bay Area: $900,000 – $1,500,000

Naturally, opt for the lowest priced home you can afford. The larger the mortgage, the more interest you pay over time. But in many counties, FHA loans can be used to finance homes priced well over $1 million.

Can I Combine Two FHA Loans to Buy a More Expensive Property?

No, the FHA prohibits obtaining multiple FHA-insured mortgages on the same property. The max loan amount you can receive is capped by the county limit.

However, two exceptions where you can blend loans are the FHA 203k rehab program and FHA construction loans. These let you finance purchase + repairs/construction up to the applicable limit.

How Much Income Do I Need to Qualify for the Max FHA Loan Amount?

The FHA doesn’t mandate a minimum income to qualify for financing. However, your income still has to be enough to meet two key guidelines:

1. Debt-to-Income Ratio: Your total monthly debt payments, including the new mortgage, cannot exceed 43% of your gross monthly income. This includes your total housing payment with taxes, insurance, HOA fees, as well as other debt like auto, student, and personal loans. The higher your total debt, the lower the monthly mortgage payment you can qualify for.

2. Residual Income Evaluation: Even if you meet the 43% DTI limit, the FHA still analyzes your remaining monthly income after all debts. This ensures you retain sufficient income to live on. Residual income requirements are based on your family size and where you live.

Meeting these two guidelines is mandatory to get approved. So while there’s no set minimum income, you still must have enough earnings to support housing costs and other obligations. A higher maximum loan amount requires higher income to qualify.

What Credit Score is Needed for the Maximum FHA Loan Amount?

The FHA has no minimum credit score. But the lower your score, the harder it will be to qualify for financing:

• 500-579 = Lowest scores permitted but expect to make a 10% downpayment or have a qualified cosigner. Max financing difficult.

• 580-619 = Easier to qualify for 3.5% down FHA loan but may need credit repair or added reserves.

• 620+ = Increasingly better rates and easier approval. Ideal for max financing.

So while credit scores as low as 500 are allowed, you’ll have the best shot at qualifying for the highest loan amount with FHA if your score is 620 or above.

How Can I Determine My Eligibility for the Max FHA Loan?

The best way to determine if you can qualify for the maximum FHA loan amount in your county is to go through pre-approval. FHA lenders will assess your:

• Income and employment
• Credit reports and scores
• Downpayment funds
• Existing assets and debts
• Property appraisal

This upfront verification will determine your probability of approval for the max loan amount and interest rate. Get pre-approved before you start shopping so you know your true budget.

Key Takeaways on FHA Max Loan Limits in California

The major points to remember about FHA mortgage limits in California