The Quick Read: The first-mortgage cap rises county by county, up to a national ceiling, and the lowest of several limits is the one that actually binds. For FHA, the one-unit limit runs from $541,287 to $1,249,125 depending on the county. The assistance itself usually does not raise that cap. It is a percentage of price or value, so it only works if the first lien still fits the county limit.
“Purchase cap” gets used to mean three different things. Buyers blur them, and that is where most surprises come from. This article separates them, walks through how a file is underwritten, and shows where the general rule breaks.
Three Ceilings Buyers Confuse
Most buyers hear “cap” and picture one number. There are three, and they test different things.
| Ceiling | Who sets it | What it tests |
|---|---|---|
| First-mortgage cap | The agency, by county | Size of the insured first loan |
| Assistance program cap | Each assistance provider | Price, loan size, or percentage |
| Leverage and income tests | Program rules | Combined loan-to-value, area income |
The first one is a rule. The second is a market feature that varies by provider. The third can bind before either of the others does. A buyer in a costly county can clear the county loan limit and still miss on income or combined leverage.
Across the wholesale programs Lendmire places files with, the assistance options are percentage-based. A grant, a forgivable second and a repayable second each take a share of price or value. None of them is a flat dollar promise. That matters in expensive counties, because a percentage scales with the home. The first-lien cap does not scale the same way.
For a fuller look at the options, see Lendmire’s down payment assistance programs.
How the FHA County Limit Is Built
The FHA limit is a formula, not one national number. By statute, FHA ties its floor and ceiling to the national conforming loan limit. Where 115% of the local median home price falls below the floor, the floor applies. Areas above the floor are high-cost areas, and FHA sets varying limits there from local median prices. The one-unit ceiling is capped at 150% of the national conforming limit, per HUD’s announcement of the limits.
HUD’s maximum mortgage limits page shows the 2026 one-unit floor at $541,287 and the ceiling at $1,249,125. It also lists areas at the ceiling and areas between floor and ceiling, and links a county search tool. Use that tool. A county table in an article goes stale.
Three things follow from the formula:
- Most counties sit at the floor. Only the highest-priced reach the ceiling.
- Many expensive counties land between the two, so the limit is neither number.
- The limit follows the case number date, not the closing date, per HUD’s page for 2026 limits.
One more point. The limit applies to the base loan. FHA’s upfront mortgage insurance is calculated on that base amount and can be financed on top. Whether the county limit excludes the financed premium is something to confirm with the loan officer on your file.
The Underwriting Steps, in Order
Here is how a file moves when assistance sits on top of a government first lien.
1. Pick the county. The property’s county sets the FHA or HUD-184 cap. For USDA, it sets area eligibility and the income limit.
2. Test the first lien. On FHA, the base loan is price minus the buyer’s cash and any grant. It must stay at or below the county limit. The FHA minimum investment is 3.5% of the lesser of price or appraised value, with 96.5% first-lien leverage.
3. Check the assistance provider’s own limits. These can be tighter than the agency’s. A county with a high FHA limit does not help if the program’s own limits bind first.
4. Classify the assistance. A grant has no lien. A second lien is secondary financing, even when it has no payment or is forgiven later. HUD’s rules treat lien-based assistance as secondary financing, not a gift.
5. Underwrite the stack. The lender calculates combined loan-to-value, which is the first loan plus all subordinate liens over adjusted value, as defined in HUD Handbook 4000.1. It then runs payment ratios that include any required second-lien payment.
6. Assemble documents. The application, an automated underwriting finding, and homebuyer education if the grant is used. Government-entity assistance on FHA adds its own authority documents.
7. Close and record. The first lien and the second are recorded in order.
Step 2 is where most “my price is over the cap” problems show up. Assistance is not a way around the first-lien limit. If the price pushes the base loan over the county limit, only more cash from the buyer or a lower price fixes it. A grant can reduce the base loan in some structures, but program rules differ, so ask before assuming.
Price Versus Value
Percentage-based assistance usually tests the lesser of purchase price or appraised value. The first lien does too. In a bidding market that matters.
Picture a buyer who offers above asking in a high-cost county. The appraisal comes in below the contract price. The lender works from the lower figure. The assistance percentage shrinks with it, and the buyer covers the gap from their own funds. A loan limit is not a purchase price limit, and a price that fits under the limit on paper can still fail on value.
Run it the other way as well. A buyer whose price sits comfortably below the county limit has room for a low appraisal to absorb. The one right at the cap has none.
The Four Assistance Shapes and How Each Meets the Cap
Each shape behaves differently when the county is expensive.
Grant. Two percent or 3.5% of the purchase price, nothing to repay, released at closing. It pairs with FHA first liens at 96.5% loan-to-value, one to four units, and no high-balance first lien. If your county limit puts the loan in high-balance territory, the grant does not apply. Credit floor is 620. Eligibility is household income at or below 140% of area median income, or a qualifying category such as first responder, educator, medical worker, civil servant, military, first-time buyer, or a property in an underserved census tract. An HUD-approved homebuyer education course is required. It is not offered in Washington.
Forgivable second. 3.5% of the lesser of price or value, no interest, no payment, forgiven after 36 or 60 on-time first-lien payments. Credit floor is 640. It pairs with FHA, USDA and HUD-184 first liens, one to two units. High-balance first liens are not allowed.
Repayable second. 3.5% or 5% of the lesser of price or value. At 5%, it also covers closing costs and prepaids. It is a real loan: interest-bearing, a monthly payment, 30-year amortization, and a balloon in year 10. Credit floor is 660. High-balance first liens are allowed here, and manual underwriting is not.
Refinance-cost second. 1% to 3.5% of the lesser of the first-lien balance or value, toward the costs of an FHA refinance, with combined leverage up to 104%. It is not for purchases. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
For a buyer in a pricey county, the high-balance rule is the practical divider. The grant and forgivable second stop where high-balance begins. The repayable second continues past it. That is a structural fact about the options, subject to program guidelines and full underwriting.
None of this requires a first-time buyer. Repeat and move-up buyers qualify. The second-lien options carry no income limit beyond USDA’s own on a USDA first lien. All of it is for an owner-occupied primary residence only. No second homes, no rentals.
Where the General Rule Breaks
USDA has no purchase cap, but has an income cap. The guaranteed program has no maximum purchase price, offers financing based on appraised value, and is not limited to first-time buyers. The property must be in an eligible rural area, and household income must be within 115% of area median income. A buyer in a high-cost county can sit in a rural-eligible area and still earn too much. Here the income test is the real ceiling.
USDA allows a soft second. Total liens generally cannot exceed market value, except for a soft second used for down payment or closing costs. That is how a USDA first lien and an assistance second coexist.
HUD-184 limits are by county and revised by letter. The program guarantees loans on trust land or in approved program areas. It does not supply assistance on its own. Any assistance comes from a separate provider. The maximum mortgage may not exceed 150 percent of FHA limits, and subordinate financing counts in the qualifying ratios. HUD sets the exact figures through lender letters, so confirm the current ones.
Special-exception areas. Alaska, Hawaii, Guam and the U.S. Virgin Islands have separate, higher FHA ceilings. The county search tool covers them.
State housing agencies add their own rules. Some apply extra leverage or pricing rules once a first mortgage runs above the conforming limit. Many public programs also cap assistance or add recapture periods. Those are program-level choices, not agency rules, and they differ by provider.
What the Decision Looks Like in Practice
Say a buyer targets a home priced right at the county limit. Three questions decide the file, in this order:
1. Does the base loan fit the county limit after cash and any grant?
2. Does the assistance shape allow that first lien type? A high-balance loan rules out the grant and forgivable second.
3. Do income and combined leverage still pass?
If the answer to the first is no, the options are plain. Bring more cash, find a lower price, change counties, or change the loan type. USDA is worth a look where the area is eligible and income is within 115%.
Now compare the same price in two counties. In a floor county, that price may sit over the limit. In a county between floor and ceiling, it may fit. Same house value, different file. That is why the county is step one.
If the home is under the cap, the next risk is value. Ask what happens if the appraisal lands low, and how much cash you could add.
A repayable second also adds a payment that enters the ratios. A forgivable second adds none but still counts toward combined leverage. Plan for both effects.
At sale or refinance, a lien-based second is repaid or subordinated out of proceeds unless it has been forgiven under its terms.
If you are buying a primary home and want to see whether a down payment assistance option fits your file, Lendmire can help you compare the grant, forgivable and repayable structures alongside an FHA, USDA or HUD-184 first mortgage, through wholesale lenders and subject to program guidelines and full underwriting.
Key Terms Defined
Base loan amount: The first-mortgage amount before any financed upfront mortgage insurance premium is added.
Combined loan-to-value (CLTV): The first loan plus all second liens, divided by the home’s adjusted value.
High-cost area: A county where the FHA limit sits above the national floor because local home prices are high.
Secondary financing: Any second loan or lien used for down payment or closing costs, even if it has no payment or is forgiven later.
Soft second: A subordinate lien for down payment or closing costs that USDA allows to push total liens above market value.
Frequently Asked Questions
Is there one national FHA cap?
No. There is a national floor and a national ceiling, and each county’s limit falls between them based on local median prices. Most counties sit at the floor. Only the highest-cost areas reach the ceiling, so an expensive state does not mean a ceiling limit in every county.
Can assistance push me past the county loan limit?
No. The limit applies to the insured first loan, and assistance does not raise it. A grant may lower the base loan in some structures, but a second lien does not make up a gap above the cap. More cash or a lower price does.
Does a forgivable second count as a grant?
No. A lien-based second is secondary financing even if it has no payment and is forgiven after 36 or 60 on-time payments. It counts toward combined leverage. A true grant carries no lien and nothing to repay.
Does USDA have a price cap like FHA?
No. USDA has no maximum purchase price. It uses an eligible-area test, an income limit of 115% of area median income, and the appraised value. In a high-cost county, the income test is usually the one that binds.
Do I have to be a first-time buyer?
No. Repeat and move-up buyers qualify. The first-time definition is just one of several categories under the grant’s income test. The home must be your owner-occupied primary residence.
How do I check my county’s current limit?
Use the county search tool on HUD’s maximum mortgage limits page and ask the loan officer to confirm which limit applies to your case number date. Limits change, and so do assistance provider rules.
For a closer look at what happens once a cap binds, see Lendmire’s piece Does DPA Help When Price Caps Bind in a High-Cost Market?.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging government-backed purchase loans and the down payment assistance options that sit on top of them through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. HUD – FHA 2026 Loan Limits announcement
2. HUD – FHA Lenders Single Family
This article is part of Lendmire’s First Time Home Buyer series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Does Using Down Payment Assistance Hurt Your Purchase Offer? · How High Down Payment Assistance Price Caps Go by Market · Can You Use a Family Gift and DPA on a 2-4 Unit Home?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.