What are the limits for an FHA loan in 2016 for Arizona?

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What are the limits for an FHA loan in 2016 for Arizona?  The FHA single family loan limit for all Arizona counties will remain unchanged in 2016.  The loan limit is $271,050 for all counties except Coconino where it will be $347,000. Higher limits apply for duplex, triplex or fourplex properties.

The loan limit of $271,050 is what is called the “floor” at 65% of the national conforming loan limit, which is $417,000. No counties have limits lower than this floor, which makes both Maricopa and Pinal “low cost” housing areas according to HUD.  Along with low cost housing, Maricopa and Pinal have some fantastic companies moving into the area.

To get off the floor, 115% of the county’s median home price has to be higher than the floor. The median home price for the third quarter was $219,500 for Maricopa and $162,945 for Pinal. When we multiply by 1.15 we get to:

  • $252,425 for Maricopa
  • $187,387 for Pinal

Median sales prices would have to rise only another 7% for Maricopa to be considered for a higher loan limit. For Pinal we would need to see a 66% rise. That is not going to happen any time soon.

The loudest complaints about the FHA loan limit come from the home builders. That is because they mostly sell homes well above the median sales price for the county and they would obviously like more of their buyers to qualify for FHA loans, given the lower credit requirements versus conventional loans. In Maricopa the median sales price for new homes during the third quarter was $307,019 and 115% of this is $353,072. It is therefore not a surprise that to home builders the FHA limit seems very low. However new homes are not at all typical of the overall housing market since the entry level home is vastly under-represented. HUD is focused on the total market not just new homes.

In 2015 up to the end of October, there have been 81,239 recorded sales in Maricopa County. 54,385 of these were below $275,000, so 67% of sales in Maricopa County are below the FHA loan limit. Only 34% of new home sales are below this price. These two numbers illustrate clearly the difference in perspective of the builders and HUD.

If you or someone you know is looking to buy a home in Arizona, please feel free to call, email, or fill out the form below to answer any of your Real Estate Related Questions.

This information provided by Michael Orr with the Cromford Report.

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