The Quick Read: Staying under a price limit starts with knowing which limit applies, because most government-backed loans cap the first mortgage, not the sale price. Down payment assistance sits behind the first lien and does not raise that cap. The lowest applicable test controls: the county loan limit, the income limit, or the appraised value. Buyers stay under by testing the first loan against the county limit before writing an offer.
Key Takeaways
- FHA caps the loan it will insure by county. It does not cap what a home can sell for.
- Assistance does not lift the first mortgage above its limit.
- The appraised value can shrink the loan below what the contract price implies.
- USDA has no purchase price cap, but it has area and income tests.
- Assistance is for owner-occupied primary residences only. Nothing on this page applies to a rental or second home.
What Is a “Price Limit,” Really?
There is usually no single price limit. Three separate tests can apply, and a buyer can pass one and fail another.
| Test | What it measures | Who sets it |
|---|---|---|
| Loan limit | Size of the insured first mortgage | HUD, by county |
| Income limit | Household income vs. area median | The program or the agency |
| Value test | Lesser of price or appraisal | The appraisal and contract |
The lowest applicable test controls. A buyer under the loan limit can still fail the income test. A buyer under the income test can still be capped by the appraisal.
Key Terms Defined
Loan limit: The most a government program will insure or guarantee on a first mortgage in a given county.
Base loan amount: The first mortgage before financed mortgage insurance is added.
Adjusted value: For a purchase, the lesser of the price (less certain inducements) or the appraised value.
Combined loan-to-value (CLTV): The first loan plus any second liens, divided by adjusted value.
Second lien: A loan recorded behind the first mortgage. It can be forgivable or repayable.
Underserved census tract: A tract that qualifies a buyer for the grant option, even if income is above the usual test.
How Do the First Lien and the Assistance Get Tested?
The first lien is tested on its own. The assistance is layered behind it and does not change what the first loan is allowed to be.
Here is the sequence on a typical file, from the wholesale programs Lendmire places files with:
1. Choose the first lien. FHA, USDA or HUD-184. The agency’s rules apply to that loan.
2. Find the limit that applies. For FHA, it is the county loan limit. For USDA, it is an eligible rural area plus household income. For HUD-184, it is the county limit and tribal-area eligibility.
3. Get the contract and appraisal. The lesser of price and value sets the adjusted value, which drives the base loan.
4. Size the first loan. FHA’s minimum investment is 3.5%, so the first lien runs up to 96.5% of adjusted value.
5. Add the assistance. It is a percentage of price or value, and the structure decides whether it adds a payment.
6. Underwrite the file. A repayable second adds a monthly payment to the debt ratios. The grant and the forgivable second add none.
7. Close. The second lien, if there is one, is recorded behind the first.
Only step four is tested against the county limit. That is the core of staying under it.
What Is the FHA Limit, Exactly?
FHA limits the mortgage, not the sale price. For one-unit homes, the 2026 FHA limits run from $541,287 to $1,249,125 depending on the county, per HUD’s FHA lender page. Counties with lower home prices sit at the floor. High-cost counties sit higher, up to the ceiling.
The ceiling ties to the national conforming limit, which is set as a baseline each year.
Two neighboring counties can have different limits. Look up the county of the home, not the county where the buyer lives now. HUD runs a public county lookup tool for this.
A home can sell above the county limit if the buyer brings enough cash that the base loan still fits underneath. That is a cash decision, not an assistance decision. Assistance cannot be used to push the first loan up. It only helps cover the down payment and, in some structures, closing costs.
Does Assistance Raise the Cap?
No. HUD’s guidance on governmental second liens says there is no maximum combined loan-to-value, but the insured first mortgage still cannot exceed the area’s FHA limit. The assistance sits behind the first lien, and only the first lien is tested.
This corrects a common mistake. Buyers see a large second lien and assume it lets them buy a pricier home under the cap. It does not.
Which Assistance Shape Fits Which Situation?
Across the wholesale programs Lendmire works with, there are four shapes. The right one depends on credit, income and the first lien. Details are subject to lender guidelines and full underwriting. This is not a commitment to lend.
| Shape | Amount | Repay? | Credit floor |
|---|---|---|---|
| Grant | 2% or 3.5% of price | Nothing to repay | 620 |
| Forgivable second | 3.5% of lesser of price or value | Forgiven after 36 or 60 on-time payments | 640 |
| Repayable second | 3.5% or 5% of lesser of price or value | Yes, balloon in year 10 | 660 |
| Refinance-cost second | 1% to 3.5% of balance or value | Yes | 660 |
Blended scores can apply on the second-lien options when a lower-scoring co-borrower is averaged in. Those minimums are 660 for the forgivable option and 670 for the repayable option.
The grant pairs with FHA first liens only, at 96.5% loan-to-value, on one to four units. It requires an HUD-approved homebuyer education course. Eligibility is household income at or below 140% of area median income, unless the buyer fits a qualifying category: first responder, educator, medical worker, civil servant, military personnel, first-time buyer, or a home in an underserved census tract. It is not offered in Washington.
The forgivable and repayable seconds pair with FHA, USDA and HUD-184 first liens. They carry no income limit beyond USDA’s own on a USDA loan. Nobody has to be a first-time buyer. Repeat buyers qualify.
You can see the full set of down payment assistance programs Lendmire arranges through wholesale lenders.
Where the Rule Breaks: Edge Cases
The appraisal comes in short. The loan shrinks to the lesser of price or value. The buyer covers the gap, renegotiates, or walks. The assistance percentage also follows the lesser figure on the second-lien options.
The county is over the floor. A price that works in a floor county can break in the next county over. Check before the offer.
The first loan is a high-balance loan. The grant does not pair with high-balance FHA. The repayable second does allow high-balance first liens. The forgivable second does not. Match the structure to the loan size.
Family or private seconds. HUD treats these differently from government seconds. The combined loan-to-value is capped, and the first mortgage still must fit the area limit. Lendmire’s piece Is There a Maximum Purchase Price for Down Payment Assistance? covers the other side of this question.
Stacking. Each option stands on its own: the grant, the forgivable second and any other assistance program are not combined. A mortgage credit certificate is not permitted with the second-lien options.
USDA. USDA’s guaranteed loan program offers 100% financing with a 90% guarantee. The tests are an eligible rural property and household income at or under 115% of area median income. There is no purchase price cap, but the loan must be supported by the appraisal. Income limits vary by county and household size, so check USDA’s county table.
HUD-184. County limits apply, and the loan is for a primary residence. The base loan is a percentage of the lesser of appraised value or acquisition cost.
Rentals and second homes. Assistance is for owner-occupied primary residences only.
What Does Staying Under Look Like in Practice?
Picture a buyer who finds a home priced slightly above what the county limit allows at 96.5% financing. Three paths exist.
- Renegotiate the price. A lower contract price lowers the base loan.
- Bring more cash. A larger down payment than the 3.5% minimum shrinks the base loan below the limit. Assistance can fund part of the minimum, not the extra.
- Change the target. A home in an adjacent county, or a different property type, may sit under a different limit.
Now picture a second buyer whose price fits but whose appraisal comes in low. The base loan follows the appraisal. The same three paths apply, plus an appraisal reconsideration request if comparable sales support a higher value.
The assistance structure matters for the monthly budget. A repayable second adds a payment and raises the debt ratios. FHA manual underwriting uses 31/43 ratios, and automated findings often allow more. The assistance options follow the automated finding. A grant or forgivable second adds no payment. Closing costs get covered at the 5% tier of the repayable second, which shrinks upfront cash further but adds a loan.
FHA also charges an upfront mortgage insurance premium on the base loan, which can be financed. That financed premium is added after the limit test, so confirm how the lender counts it before sizing a tight file.
Common Mistakes
- Testing the contract price when the lesser of price and value is what counts.
- Reading a stale limit table. Limits reset each year.
- Assuming a bigger second lien buys a bigger house.
- Forgetting that a repayable second adds a monthly payment.
- Treating a forgivable second as a gift. It is a lien until forgiven.
- Skipping the homebuyer education course on the grant.
A Verification Routine Before You Offer
1. Identify the first lien type and the home’s county.
2. Look up the current county limit on HUD’s tool.
3. Test household income against the program’s test.
4. Run the lesser of price and expected value.
5. Confirm the assistance structure and its credit floor.
6. Ask the broker to re-check the limit when the appraisal lands.
Programs change. Every file is underwritten individually, through wholesale lenders, subject to program guidelines.
Frequently Asked Questions
Is there a maximum home price with down payment assistance?
Usually not on the sale price itself. The first mortgage has a county loan limit, and USDA has income and area tests. A buyer can pay more than the limit if the base loan still fits, which means bringing more cash.
Do I have to be a first-time buyer?
No. Repeat and move-up buyers qualify across the options. The three-year first-time definition is only one of the grant’s qualifying categories.
Does assistance change the loan limit?
No. The assistance sits behind the first lien. Only the first lien is tested against the county limit.
Can I exceed the limit with more cash?
Yes, in effect. A larger down payment lowers the base loan. The extra cash comes from the buyer, not from assistance, which covers the minimum investment and, at the higher repayable tier, closing costs.
Does the limit change by county?
Yes. HUD sets FHA limits by county and metro area, and they reset annually. Always check the county where the home sits.
Next Step
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. Call 828-256-2183.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Lendmire arranges FHA, USDA and HUD-184 purchase loans with down payment assistance options through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. USDA
2. HUD FHA Lenders – Maximum Mortgage Limits
This article is part of Lendmire’s down payment assistance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Does Down Payment Assistance Change Your Payment If You Refinance? · How Down Payment Assistance Changes Your Monthly Payment · Can You Use Down Payment Assistance on a New Construction Home?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.