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The Federal Housing Administration (FHA) published a Mortgagee Letter that increases the threshold at which a multifamily loan is considered a large loan from $75 million to $120 million. This marked the first increase in the multifamily loan threshold since 2014.

The FHA also announced it will begin to review the threshold on an annual basis, with the possibility of increasing it in $5 million increments if warranted. The agency stated the changes are designed to simplify underwriting for multifamily housing development without presenting undue risk to FHA.

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“We know that borrowers are contending with the dual challenges of increased development costs and meeting the nation’s dire need for more rental housing,” said Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon. “Anything we can do to prudently alleviate extra steps in obtaining FHA insurance will help all of us meet the housing supply challenges before us.”

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