Bigger Loan Limits Mean More Buying Power
Effective January 1, 2026, the U.S. Department of Housing and Urban Development (HUD) officially raised FHA loan limits to reflect rising home values nationwide. The new conforming loan limit is $832,750, and FHA limits are calculated as a percentage of that number.
For Colorado buyers — particularly first-time buyers using FHA financing with as little as 3.5% down — this is significant news.
2026 FHA Loan Limits at a Glance
| Area Type | 1-Unit | 2-Unit | 3-Unit | 4-Unit |
|---|---|---|---|---|
| Standard (Floor) | $541,287 | $693,050 | $837,700 | $1,041,125 |
| High-Cost (Ceiling) | $1,249,125 | $1,599,375 | $1,933,200 | $2,402,625 |
Source: U.S. Department of Housing and Urban Development (HUD), effective January 1, 2026
What This Means for Colorado
Colorado has a mix of standard and high-cost counties, which means FHA limits vary depending on where you're buying:
- Denver, Boulder, Jefferson, Broomfield, and other metro counties qualify for higher limits due to elevated median home prices — often approaching the ceiling.
- Mountain resort counties (Eagle, Pitkin, Summit, San Miguel) typically qualify for the maximum FHA limits, making FHA financing viable even in some luxury-adjacent markets.
- Eastern Plains and Southern Colorado fall under the standard floor limits, which still provide strong buying power for homes in the $400,000-$525,000 range.
Why FHA Loans Are Still a Smart Choice in 2026
FHA loans remain one of the most accessible paths to homeownership, especially for buyers who don't have a 20% down payment saved. Key advantages include:
- 3.5% minimum down payment with a credit score of 580 or higher
- More lenient credit requirements compared to conventional loans
- Gift funds allowed for the entire down payment amount
- Seller concessions up to 6% of the purchase price — helping cover closing costs
- Competitive interest rates that are often comparable to or better than conventional rates
The FHA Mortgage Insurance Trade-Off
The main consideration with FHA loans is mortgage insurance. FHA requires both an upfront mortgage insurance premium (UFMIP) of 1.75% of the loan amount and an annual premium of 0.55% that's added to your monthly payment.
For a $500,000 FHA loan, this looks like:
- Upfront MIP: $8,750 (can be rolled into the loan)
- Annual MIP: ~$229/month
While this adds cost, many buyers find it's a worthwhile trade-off to get into a home sooner — especially when home values continue to appreciate at 3-4% annually.
FHA vs. Conventional: Quick Comparison
| Feature | FHA | Conventional |
|---|---|---|
| Minimum Down Payment | 3.5% | 3% (5% typical) |
| Credit Score Minimum | 580 | 620-680 |
| Mortgage Insurance | Required (life of loan) | Removable at 80% LTV |
| Seller Concessions | Up to 6% | Up to 3-6% |
| Gift Funds | 100% of down payment | Varies by program |
Next Steps
If you're considering an FHA loan for your Colorado home purchase, the increased 2026 limits open doors that weren't available before — particularly in Denver Metro and mountain communities where prices run higher.
Get pre-approved with Cedar Home Loans to see exactly how much home you can afford with FHA financing. We'll help you compare FHA vs. conventional options and find the best fit for your situation.
