Written by the Simply Approved Mortgages editorial team
Reviewed for program accuracy by our Simply Approved Mortgages underwriting desk — Licensed mortgage originators (NMLS) — Colorado & Florida. We summarize published federal program rules; we do not set them. This article is educational and is not a quote, approval, or commitment to lend.
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Many buyers hear "that house is over the FHA limit" and assume FHA is off the table. It usually isn't. What changes is how much cash you need at closing, and whether another loan type ends up costing less. This guide walks through how the limit actually works, what the cash gap looks like, and how to compare FHA against a conventional loan when a home is priced above your county's figure.
What Does the FHA Loan Limit Actually Limit?
The county FHA limit is the most HUD will insure as a base loan amount for a one- to four-unit home in that county. HUD publishes the limits each calendar year, and they vary by county and by the number of units; our guide to FHA loan limits and the maximum amount you can borrow covers how they are set. Your maximum base loan is the lower of two numbers: your county's limit, or the FHA maximum loan-to-value (96.5% of the price or appraised value, whichever is lower, for borrowers with a credit score of 580 or higher), as set out in HUD Handbook 4000.1.
The limit does not cap the purchase price. If the home costs more than the limit allows you to borrow, the extra simply becomes part of your down payment. You can look up the exact figure for any Florida or Colorado county with our county FHA limit lookup or on HUD's official limit search.
How Much Cash Do You Need When the Price Is Above the Limit?
Here is a hypothetical example using HUD's 2026 national floor limit of $541,287 for a one-unit home, which applies in many Florida and Colorado counties. Suppose you find a single-family home for $600,000 in a county at that floor:
- Maximum FHA base loan: $541,287, because the county limit is lower than 96.5% of the price ($579,000).
- Down payment needed: about $58,713 (roughly 9.8% of the price) to cover the amount above the FHA limit, rather than the 3.5% FHA minimum down payment.
- Upfront mortgage insurance (UFMIP): 1.75% of the base loan in this example, about $9,473, which can be financed into the loan.
- Closing costs: due in addition to the down payment; FHA allows seller concessions to help with these.
In this example the loan-to-value is about 90.2%, so for a term over 15 years and a base loan amount of $726,200 or less, HUD's annual MIP would be 0.50% of the loan, and because the LTV is above 90% it stays for the life of the loan. You can test these numbers with our FHA MIP calculator.
Where Can the Extra Down Payment Come From?
The money that covers the gap must come from an acceptable, documented source. Under HUD rules that typically includes your own savings and checking, retirement or investment funds you liquidate, and gift funds from an eligible donor such as a family member, with a signed gift letter and a paper trail.
Some Florida and Colorado down payment assistance programs can help with part of the cash you need, but each program has its own income limits, purchase-price caps and loan-amount caps. A home priced above the FHA limit may also be above a program's price cap, so check the program terms before you count on it.
When Does a Conventional Loan Make More Sense?
A conventional loan is not required when a home is above the FHA limit, but it is often worth comparing once your down payment grows. Conventional loans follow Fannie Mae or Freddie Mac guidelines plus each lender's own requirements, and they generally reward stronger credit with better pricing.
The biggest difference is mortgage insurance. With FHA you pay both the upfront premium and an annual premium. With a conventional loan and less than 20% down you usually pay private mortgage insurance (PMI), and under the federal Homeowners Protection Act you can ask to cancel conventional PMI once your balance reaches 80% of the home's original value, and it ends automatically at 78% if you are current on payments, according to the Consumer Financial Protection Bureau. If the gap already puts you near 10% or more down, run both options side by side with our FHA vs. conventional comparison.
Above the conforming loan limit that the Federal Housing Finance Agency sets each year, a conventional loan is generally called a jumbo loan, which usually has stricter credit, reserve and down payment requirements.
What Should You Do Before Making an Offer?
- Confirm your county's current FHA limit and the number of units in the home.
- Work out the gap between the price and the maximum base loan, then add closing costs.
- Document where every dollar of the down payment will come from.
- Compare the total monthly payment and mortgage insurance cost for FHA and conventional.
- Get pre-qualified so your offer reflects a realistic budget.
Simply Approved Mortgages is a mortgage broker, not a lender, and can compare FHA and conventional options from multiple lenders for your scenario. When you're ready, start with a quick pre-qualification. All loans are subject to lender underwriting and approval.
Sources
These government publications are cited for FHA program background and general consumer education. FHA program rules described here are published by HUD and are not underwriting decisions; all loans remain subject to lender underwriting and approval. Simply Approved Mortgages LLC (NMLS #2620881) is a mortgage broker and is not HUD, FHA, or the CFPB, and is not affiliated with or endorsed by any government agency.
