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IRS Rev. Proc. 2025-18, which is the currently effective pronouncement on Single Family purchase price limits, in Section 3.03 provides that if FHA releases future updated loan limits, a Housing Finance Agency (HFA) has the option to use the newer FHA loan limits to compute new Single Family purchase price limits and use them until the IRS issues updated limits (usually in April or May). This is done by dividing the applicable new FHA loan limit by 0.867, and then applying the applicable 90% (for non-targeted area mortgage loans) or 110% (for targeted area mortgage loans) to such numbers.

On December 11, 2025,  FHA released its loan limits for 2026 (see HUD Mortgagee Letter 2025-23, effective Jan. 1, 2026) noting that loan limits again went up in most locales due to continuing increases in home purchase prices. The “minimum” or “base” FHA loan limit increased $541,287 (from $524,225), resulting in a 2026 single family MRB 1-unit purchase price floor of $624,322 (i.e., $541,287/0.867), and a 2026 single family 1-unit purchase price limit of $1,249,125 resulting in an MRB limit of $1,440,744 (i.e., $1,249,125/0.867), to which the 90/110 factor must be applied. As usual, an HFA should check the new FHA loan limits when finally issued to determine whether there are any areas which will have a different FHA loan limit for 2025.

What does this mean for HFAs? 

HFAs are NOT, as of January 1, 2026, required to use the new 2026 FHA loan limits to determine average area purchase price limits. The present IRS limits that were published in Revenue Procedure 2025-18 are still in effect until the IRS issues a new Rev. Proc. superseding the existing limits. Typically, that will occur in the first half of 2026. However, beginning January 1, 2026 (the effective date of the new FHA loan limits), an HFA has the option of calculating new purchase price limits using the 2026 FHA loan limits or continuing to use the purchase price limits published last year in Revenue Procedure 2025-18.

Since the FHA base loan limit for 2026 has increased, the base IRS purchase price limit using the 2026 FHA base loan limits would usually also increase. Most areas will have increased FHA loan limits for 2026, and an HFA can use the new FHA loan limits to compute a higher purchase price limit for that area if the HFA so desires. (Warning – in most years, when the IRS issues its new purchase price limits in a Rev. Proc., generally in March, the safe harbor numbers in the new 2026 IRS Rev. Proc. will be impacted by the new divisor that is applied to the FHA loan limit in order to determine the average area purchase price. That impact could be positive or negative, depending on whether the divisor is above or below 1, and often results in slightly lower purchase price limits than the previous divisor.)

Per Rev. Proc. 2025-18, the high housing cost calculation of Section 143(f)(5) does not permit an HFA to use the purchase price numbers from one year and income numbers or the nationwide average purchase price number from another year. For purposes of the high housing cost adjustment to income limits, an HFA must continue to use the 2025 purchase price numbers until new income numbers and the new nationwide average purchase price number are published in 2026.

We note that most HFAs are already at full capacity for their single-family programs financed by tax-exempt single family mortgage bonds, so a short-term increase in single family purchase price limits may be of little or no interest, particularly since such increase limits may well change just a few months later.

If you have questions about any of the foregoing, please contact any of the attorneys listed below in Kutak Rock’s Housing Finance Agency Practice Group. We would be happy to discuss this with you.