Denver FHA and Conforming Loan Limits Higher in 2016, Due to Price Gains

The 2016 FHA loan limit for Denver is $458,850. The new conforming loan limit is also $458,850. Both of them were increased from last year due to significant home-price gains in the metro area.

Here’s some good news for mortgage shoppers in the Mile-High City. The Department of Housing and Urban Development (HUD) has decided to increase the FHA loan limits for Denver in 2016. Additionally, the Federal Housing Finance Agency (FHFA) boosted the maximum amount for conventional conforming home loans.

This means home buyers across the Denver metro area could qualify for larger mortgages in 2016 compared to the previous year, regardless of what type of loan they use.

Denver FHA Loan Limits Increased in 2016

The maximum FHA mortgage limit was increased in response to significant home-price gains over the last year. House values across the Denver metro area rose steadily all through 2015. As a result, they are significantly higher now, as we head into 2016, than they were a year ago. The Department of Housing and Urban Development (HUD) reviewed this trend and decided to increase the FHA loan limits for Denver in 2016.

Here are the Federal Housing Administration caps for both this year and next:

  • 2015 FHA limit for a single-family home in: $424,350
  • 2016 FHA limit for a single-family home in: $458,850

These limits apply to all counties within the Denver metropolitan area, including Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties.

The numbers shown above pertain to single-family homes. There are higher limits for multi-family properties, such as duplexes and triplexes. Here are the 2016 FHA loan limits for all property categories:

1-Family 2-Family 3-Family 4-Family
$458,850 $587,400 $710,050 $882,400

These limits apply to all Denver-area FHA loans with case numbers assigned on or after January 1, 2016. They will remain in effect until the end of the year, at which time they will be reviewed again.

Home Prices Rose by Double Digits in 2015

Denver was one of the big real estate stories of 2015. It was often labeled as one of the hottest housing markets of that year. Home prices in the area reached new all-time highs in September ’15, and they haven’t stopped rising since.

  • According to the S&P/Case-Shiller Home Price Index, Denver house values rose by nearly 11% from Sept. ’14 to Sept. ’15.
  • The real estate information company Zillow reports even higher gains for the broader metro area. The Zillow Home Value Index (ZHBI) for this metro rose by a whopping 16% over the last year or so (as of December ’15).

This is why HUD increased the FHA loan limits for Denver home buyers in 2016. This loan program is designed for buyers in the low to moderate income range. It’s meant to cover the cost of a modestly priced home. But the definition of “modestly priced” has increased considerably over the last 12 months.

In short, homes within the Denver real estate market cost more these days, so buyers need access to larger loans. The higher 2016 Denver FHA loan limits are simply HUD’s way of keeping up with changing market conditions and a higher cost of living.

Maximum Conforming Loan Size Also Increased

The information above pertains to FHA-insured home loans in particular. But Denver home buyers who use conventional (non-government-insured) mortgages will also have higher limits in 2016. That’s because the Federal Housing Finance Agency (FHFA) increased the maximum conforming loan limit for the entire Denver metro area in 2016.

It was $424,350 in 2015. It will be raised to $458,850 in 2016, an increase of  $34,500.

According to an FHFA press release: “Although the baseline loan limit will be unchanged in most of the country, 39 specific high-cost counties in which home values increased over the last year will see the maximum conforming loan limit for 2016 adjusted upward.” Denver was one of the 39 counties that saw an increase.