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HUD Increases Maximum FHA Mortgage Amounts in High Cost Areas

Agencies planning to utilize FHA Multifamily housing loans as part of a development financing package should be aware of these updates from HUD. 

On January 22, HUD issued Notice H 2023-2, listing the High Cost Percentages and High Cost Areas as applicable to HUD’s FHA Multifamily Housing Programs. Generally, for projects in geographic areas listed in the notice, the maximum mortgage amount may be increased by 270 percent, and can be increased on a case-by-case basis up to 315 percent. The special limit areas of Guam, the U.S. Virgin Islands, and the states of Alaska and Hawaii have a High Cost Percentage of 405 percent. 

These changes are effective January 1, 2024 for multifamily mortgage insurance Firm Commitment applications and for amendments which have not been initially endorsed. 

The notice also provides the Per Unit Limit for Substantial Rehabilitation for 2024 for FHA insured loan programs, increasing the per-unit base amount for determining substantial rehabilitation to $19,293 per unit.

The notice further provides an updated Large Loan Risk Mitigation Threshold for 2024, increasing the threshold from $120 million to $125 million. 

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