Limits on FHA-Insured Mortgages
Amount of the Mortgage
There is a limit on the maximum mortgage HUD will insure. However, FHA loan limits are adjusted annually to the median cost of housing in your area.
Information about the mortgage limits for the area you live in may be obtained from HUD approved lending institutions or the local HUD Field Office, or go to the HUD website.
Property Appraisal
For an existing home, HUD's estimate of the appraised value is based on the condition of the house and recent sales of comparable properties in the neighborhood. If there are obvious, serious defects, the house must be repaired before HUD insures the mortgage.
If your house has not yet been built, HUD will base the estimate of its value on the plans and specifications for the house and the value of the land where it will be built.
Existing houses are generally sold "as is" unless the buyer and seller agree, usually in writing, to repairs. Since there may be hidden defects in a home, the homebuyer should carefully examine the house or have the house inspected by a professional home inspection firm and be satisfied of its soundness before purchasing. HUD lets you use up to $300 of the cost of the inspection as part of your down payment. Typically, a home inspection costs from $200 - $500. An appraisal is not an inspection, and HUD does not warrant the condition of the house you buy.
