Conventional Loan Limits For 2022 Increases To $647,200

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will discuss and cover the new updated 2022 conventional loan limits increasing to $647,200 in traditional counties in the United States. 2022 conventional loan limits have increased to $970,800 for single-family homes in high-cost areas.  The U.S. economy is booming. Historic records are being broken as days, weeks, and months pass. Unemployment numbers hit 3.5% which is at a 50-year low. The Dow Jones Industrial Average is hitting new highs every day. Lowest unemployment numbers for African Americans, Asians, Hispanic Americans, and women in the history of the United States. Lowest mortgage rates since the 2008 Great Recession.

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Highest Number of Homeowners Recorded in History

Highest Number of Homeowners Recorded in History

Highest homeownership ever recorded in history. The housing market has never been so strong in the history of the United States. Demand for housing has never been this strong. There is more demand for homes than inventory. Homebuilders are reporting record sales and revenues. Homebuilders are selling homes before they are getting final permits and plans approved. With a strong housing market with more demand versus inventory comes a higher home price.

Conventional Loan Limits Increases For Six Years in a Row Due to Skyrocketing Home Prices

The Federal Housing Finance Agency (FHFA) has announced 2022 Conventional Loan Limits increased to $647,200. This is the sixth year in a row the FHFA is increasing conventional loan limits due to the hot housing market. In this article, we will cover and discuss the breaking news on 2022 conventional loan limits increasing to $647,200. This is the sixth year in a row the Federal Housing Finance Agency has increased conforming loan limits.

Breaking News Of FHFA Increasing 2022 Conforming Loan Limits To $647,200

Breaking news of the FHFA increasing 2022 Conforming Loan Limits to $647,200 due to rising home prices have made homebuyers be able to afford to purchase a home. Many homebuyers have been nearing being priced out of the housing market due to rising home prices.

 Conforming Loan Limits Has Been Increasing Six Years in a Row

This marks six years in a row that the Federal Housing Finance Agency increased conventional loan limits. Although the 2022 Conforming Loan Limits increase is not effective until January 1st, 2022. Gustan Cho Associates is accepting the 2022 Conforming Loan Limits effective immediately even before January 1st, 2022. Borrowers do not have to wait until January 1st, 2022 to take advantage of the 2022 Conventional Loan Limits increase to $647,200.

News From The Federal Housing Finance Agency

According to the Federal Finance Housing Agency:

The high-cost area loan limits are established for each county (or equivalent) and are published on Fannie Mae’s website and on FHFA’s website.

Conventional Loan Limits in High-Cost Area

High-Cost Maximum Loan Limit

The conventional loan limit increase also applies to high-balance loans in high-cost areas. 

* A number of states (including Alaska and Hawaii), Guam, Puerto Rico, and the U.S. Virgin Islands do not have any high-cost areas in 2020.

Here is what Fannie Mae and Freddie Mac stated in their breaking news press release:

High-cost area loan limits are derived from median home prices estimated by the Federal Housing Administration (FHA) of the Department of Housing and Urban Development (HUD). FHA will permit a 30-day appeals period during which requests for individual area median home price increases will be evaluated. FHFA will issue a subsequent announcement if any individual high-cost area loan limit is increased as a result of the appeals process. Updates resulting from subsequent FHFA announcements will be posted on our website. Loans subject to the high-cost area limits are referred to as high-balance loans and must comply with the high-balance loan requirements described in the Selling Guide. All loan limits apply to the original loan amount of the mortgage loan, not to its balance at the time of purchase by Fannie Mae. Lenders are responsible for ensuring that the original loan amount of each mortgage loan does not exceed the applicable maximum loan limit for the specific area in which the property is located.

When Does The Conventional Loan Limits Increase UPDATE Take Place

Fannie Mae and Freddie Mac’s updated loan limit increase will be taking effect on January 1st, 2022. However, some lenders like Gustan Cho Associates will honor the 2022 Conforming Loan Limits increase effective immediately prior to the January 1st, 2022 effective date. Contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response for more information about the effective date. Or email us at [email protected]

2022 Conventional Loan Limits Versus FHA And VA Loans

In general, HUD, the parent of FHA, follows the loan limit increase on conventional loans.

In general, HUD, the parent of FHA, follows the loan limit increase on conventional loans. HUD has announced FHA loan limits for 2022 have been increased to $420,680. This is the sixth year in a row HUD has increased FHA loan limits on FHA loans due to skyrocketing home prices.

HUD Increases FHA Loan Limits For the Past Six Years Due to Increasing Home Values

For the past six years, HUD was right behind FHFA when announcing the FHA Loan Limit increase. The VA no longer has a maximum loan limit cap. Former President Donald Trump signed a bill eliminating maximum VA Loan Limit Caps on VA loans back in 2020 while he was the 45th President of the United States.

UPDATE ON FHA LOAN Compared To Conventional Loan Limits FOR 2022

HUD, the parent of FHA, announced the new loan limit on FHA loans for 2022 will be $420,680 in most counties in the United States on single-family homes. FHA loan limit in high-cost areas will increase to $970,800.

HUD and FHFA Increases FHA and Conventional Loan Limits So Buyers Are Not Priced Out of the Housing Market

Conventional loan limits increase due to high to $647,200 due to skyrocketing home prices. Similar to years prior, the Federal Housing Finance Agency (FHFA) has announced the maximum conforming loan limit will once again be raised for the calendar year of 2022.

High-Balance Conventional Loan Limits Increase to $970,800 For 2022

The increase is set for conforming loans that will be acquired by FANNIE MAE and FREDDIE MAC to be raised to $647,200 in median-priced areas. In high-cost areas, the conventional loan limits increase to $970,800, In this blog, we will detail what the loan amount change means for you and why the loan amounts were raised. In this article, we will cover and discuss Conventional Loan Limits Increase To $647,200.

Conventional Loan Limits Increase To $647,200 To Keep Up With Rising Home Prices

Conventional Loan Limits Increase To $647,200 To Keep Up With Rising Home Prices

Raising the conforming loan limit is an important step for keeping homebuyers in the mortgage market with home prices on the rise across the nation. According to the Federal Housing Finance Agency, the home prices in the United States rose in the third quarter of 2021, by 1.1% (Measured by House Price Index (HPI). 1.1% may not sound like a lot, but that is a significant jump for just a few months. Comparing the past 12 months, home prices rose a staggering 4.9%. That is calculated from quarter 3 of 2019 through quarter 3 of 2020.

Role Of The Federal Housing Finance Agency (FHFA)

The Federal Housing Finance Agency is the main source of house price indexes. It is our nation’s only free public data source for Home Price Index data across all 50 states. They’ve been gathering this information since the mid-1970s. The home price indexes are built from tens of millions of home sales.

How Data From The Home Price Index Influence Conventional Loan Limits

The home price index is offer insights into the housing in future home price models. According to William Doerner, an FHFA Supervisory Economist, “House prices have risen every quarter for the last 8 years”. He goes on to state that we are still in an upward trend of home prices however the price gains are starting to slow down their upward pace.

Reason For Conventional Loan Limits Increase To $647,200

House prices rose across all 50 states and the District of Columbia between quarter 3 of 2018 and quarter 3 of 2021. The top five states where the house price index rose were Idaho (11.6%), Maine (7.9%), Arizona (7.9%), Utah (7.8%), and Indiana (7.4%). States showing the smallest appreciation were Illinois (1.9%), Connecticut (2.2%), Maryland (2.4%), South Dakota (2.7%), and Iowa (3.2%).

Data of Upcoming Conventional Loan Limits

Certain cities in our nation such as Boise, Idaho saw home price values Rise by 11.1%!  In other areas such as Camden, New Jersey we’re only increased by 0.7%. It is the job of the Federal Housing Finance Agency to weigh the ups and downs of the nation’s housing market to change loan limits accordingly. 

Data Released By The Federal Housing Finance Agency

Data Released By The Federal Housing Finance Agency

The data furnished by the Federal Housing Finance Agency it’s very interesting. To view the top 20 and bottom 20 metropolitan areas for quarter 3 of 2021, please click the following link:

TOP 20 and BOTTOM 20 HPI’s NATIONWIDE

If this data seems overwhelming, we will now break down what this loan amount increase means for you. Conforming mortgage guidelines are set by Freddie Mac and Fannie Mae. These two government-sponsored enterprises regulate the conventional mortgage market. Current indications show Freddie Mac and Fannie Mae will once again be privatized, which should expand mortgage lending programs. But for now, we must conform to their guideline standards.

How The FHFA Adjusts Baseline Conventional Loan Limits Each Year

The Federal Housing Finance Agency is mandated by the Housing and Economic Recovery Act (HERA) to adjust the baseline conforming loan limit each year to reflect changes in average home prices. On November 25th, 2021 FHFA published the third-quarter data showing the average increase in U.S. home price values. According to their data, house prices increased to 5.38% on average. The maximum conventional loan limits for the calendar year 2022 will increase by a similar percentage and are now capped at $647,200. 

High-Balance Conventional Loan Limits In High-Cost Areas

High-Cost Area Limits:

  • In many parts of our nation, the local median home value exceeds $647,200
  • These counties are considered HIGH-COST AREAS
  • To be considered a high-cost area, the median home value must exceed the local median home value by 115% or more
  • Counties Across the Nation have higher loan limits
  • HERA establishes a maximum loan limit for all areas of the country called a ceiling

High-Balance Conventional Loan Limits in High-Priced Areas

The ceiling is 150% of the Baseline loan limit. 

  • $647,200* 150% = $970,800

These calculations are for ONE-UNIT properties. For a list by county and for two to four-unit dwelling loan limits please click this HIGH-COST LOAN LIMIT PDF

Benefits Of 2022 Conventional Loan Limits Increases To $647,200

Benefits Of 2020 Conventional Loan Limits Increases To $510,400

What does the Conventional Loan Limits Increase To $647,200 mean for conforming borrowers? The increased loan limits for the year 2022 will help thousands of Americans utilize a conforming mortgage to buy their property. A loan amount above the conforming loan limit falls into the JUMBO MORTGAGE category. Jumbo mortgages are amazing loan programs but are harder to qualify for. Many times, a jumbo mortgage will require significant cash reserves after closing.

Conventional Loans Limits on Jumbo Versus Conventional Loans

Jumbo loan products can require up to 18 months of cash reserves in order to qualify. When purchasing an $800,000 home, that amount can add up quickly. The increased loan limit will help potential home buyers buy a home within the Fannie Mae and Freddie Mac lending guidelines.

Increase in Conventional Loan Limits are for Both Conforming Loans and High-Balance Conforming Loans

The increased loan limits also apply to mortgage refinance. In the calendar year 2022, you may refinance your home based on the increased loan limits. For example, you may be able to cash out more if you complete your cash-out refinance transaction in the calendar year 2022. Please see our article for more information on CONVENTIONAL CASH OUT MORTGAGES.

Increasing Home Prices Is Increasing Conventional Loan Limits: Fear of Housing Market Correction

While some experts argue the price of homes is increasing at an alarming rate, dooming us to another housing bubble, many other experts feel real estate is growing proportionally with the rest of the economy.  The Federal Housing Finance Agency has shown us pockets of the country that are growing quickly and others that are almost stagnant. If you and your family are looking to relocate, we suggest reading into this data. The team at Gustan Cho Associates is available seven days a week for any mortgage-related questions. We offer FHA, Conventional, and VA mortgages without any LENDER OVERLAYS. Please call Mike Gracz on 630-659-7644 or email [email protected] to schedule a one-on-one mortgage consultation today.