WASHINGTON – Dec. 8, 2014 – The Federal Housing Administration (FHA) announced its new loan limits for 2015, effective for case numbers assigned on or after Jan. 1, 2015 and effective for the entire year.

FHA's calculation for maximum loan limits in high cost metropolitan areas of the country will remain the same as the 2014 level: $625,500. The current standard loan limit for areas where housing costs are relatively low will also remain unchanged: $271,050.

Each year, FHA recalculates its national loan limit that's based on the national conforming loan limit, though that limit can vary by area.

How FHA calculates loan limits

FHA's minimum national loan limit "floor" applies in areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit. Conversely, any area where the loan limit exceeds the "floor" is considered a high cost area with a "ceiling" at 150 percent of the national conforming limit. In areas where 115 percent of the median home price (of the highest cost county) exceeds 150 percent of the conforming loan limit, the FHA loan limits remain at 150 percent of the conforming loan limit.

Areas are eligible for FHA loan limits based on median area home prices, with adjustments for two-, three-, and four-unit properties, and in Special Exception Areas.

The mortgage loan limits for FHA-insured reverse mortgages will also remain unchanged. The FHA reverse-mortgage product, known as the Home Equity Conversion Mortgage (HECM), will continue to have a maximum claim amount of $625,500, with actual loan limits based on property value, borrower age and current interest rates.

Reverse mortgages allow homeowners age 62 and older to age in place by borrowing against the value of their homes without any requirements for monthly payments; no repayment is required as long as a homeowner lives in the home. The reverse mortgage is repaid, with interest, when the homeowner leaves the home.