FHA’s HECM loan limit rises above $1.1 million in 2024

The lending limit for federally-backed reverse mortgages is increasing for the eighth consecutive year in a row to $1,149,825 in 2024.

The Federal Housing Administration (FHA) announced on Tuesday via Mortgagee Letter (ML) 2023-22 a maximum claim amount of $1,149,825 in 2024. That’s up $60,525 from the $1,089,300 limit for Home Equity Conversion Mortgages (HECMs) in 2023. The increase is roughly half of the $118,500 increase from one year ago.

HUD calculates this figure at 150% of the conforming loan limits on mortgages backed by Fannie Mae and Freddie Mac. The Federal Housing Finance Agency (FHFA) also on Tuesday announced that conforming limits will increase to $766,550 in 2024.

The annual FHFA announcement is a “sneak peek” at the limits for the HECM program in the new year, but both figures publish almost simultaneously.

FHFA’s third quarter 2023 Housing Price Index (HPI) report, also published on Tuesday, saw home prices increase by an average of 5.5% between the third quarters of 2022 and 2023. This growth rate is much lower than the rate seen during the same period last year (12.3%).

“The increase in the Home Equity Conversion Mortgage Maximum Claim Amount for 2024, as mandated by statute, tracks to the increases in FHA’s 2024 forward mortgage loan limits,” said FHA Commissioner Julia Gordon when reached by RMD.

Industry reaction

National Reverse Mortgage Lenders Association (NRMLA) President Steve Irwin offered a positive reaction to the news.

“I am pleased to see the HECM lending limit increase for calendar year 2024,” Irwin told RMD. “Given the continued, though somewhat moderated, home-price appreciation across the U.S., this increase will expand the accessibility of the FHA-insured HECM program for older homeowners who may need to access their home equity to augment their retirement finances.”

The FHA typically aligns the new HECM limit with the new conforming loan limits, which reflect changes in annual home prices as required by the Housing and Economic Recovery Act of 2008 (HERA).

The limit handed down by the U.S. Department of Housing and Urban Development (HUD) for federally-backed reverse mortgages in 2023 was $1,089,300, which matched the FHFA’s high-cost limit and pushed the HECM lending limit over $1 million for the first time.

Continuing the trend from recent years as noted in the FHA’s Annual Report to Congress, the reverse mortgage portion of the Mutual Mortgage Insurance (MMI) Fund reached positive territory once again, though slower HPA compared to 2022 depressed the HECM book’s performance somewhat in a development the agency had telegraphed the year prior.

Prior increases

For several years, the reverse mortgage lending limit remained stagnant, before rising in 2017 from $625,500 to $636,150. Since then, increases in the HECM lending limit have closely tracked those of conforming loan limits.

The new loan limit will take effect for loans with case numbers assigned on or after Jan. 1, 2024, through Dec. 31, 2024.

The release of the new HECM lending limits came on the same day as the release of Mortgagee Letter 2023-21, which specified new forward mortgage loan limits. FHA’s nationwide forward mortgage limit “floor” and “ceiling” for a one-unit property in 2024 are $498,257 and $1,149,825, respectively.

Editor’s note: This story was updated with a statement from FHA Commissioner Julia Gordon

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