Loan Limits On Government And Conventional Loans

In this blog, we will discuss and cover the 2022 loan limits on government and conventional loans. The housing market is booming. Home prices have gone up substantially year after year for the past ten years. There is no sign of any housing market correction. Both HUD and the FHFA have increased FHA and Conforming Loan Limits for the six five years due to rising home prices. Every calendar year the lending agencies such as FANNIE MAE, FREDDIE MAC, USDA, FHA, and VA change their maximum loan amount guidelines. Loan limit information is gathered over a 12 month period and adjusted annually. In this article, we will detail when these changes will go into effect for each agency. We will also detail how you can apply for a loan with Gustan Cho Associates.

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2022 Loan Limits On Government And Conventional Loans Increases Again Due To Skyrocketing Home Prices

2022 Loan Limits On Government And Conventional Loans Increases Again Due To Skyrocketing Home Prices

If you have been following our blogs, you have more than likely already seen the loan amount increases on conventional mortgage lending and FHA. For 2022, the maximum conforming loan limit in the US is now at  $647,200. The maximum loan amount for FHA will be $420,680. This is in your standard counties across the country and not high-price areas. For 2022, the high-cost FHA and conforming loan limit are capped at $947,800.

Loan Limit Increased For The Past Six Years Due To Skyrocketing Home Prices

These increases were put into effect based on the previous 12 months of available data. The measurement used to create loan limits is based on the home price index or  HPI. Over the past 12 months we saw a 14.42% increase across the nation. This is a good sign for the housing market. This increase means real estate values are up nationwide. In some areas of the country, the increases have been higher than normal. Even during the COVID-19 coronavirus outbreak, it’s a good sign to see increases throughout the housing market. While some areas of the country have decreased, the home price index is based on a nationwide average. For more information on these increases, please see our blog on FHFA 2022 LOAN LIMITS 

When Does The New 2022 Loan Limits Take Effect

When can a client utilize the increased loan limits? This is a good question, and it varies per agency. Each agency has its own timeline of when these increases will go into effect. Conventional mortgages already allow the increased loan amounts as long as the lock rate is valid through January 4, 2022. This is true for Fannie Mae loans submitted through desktop underwriter (DU) prior to December 12, 2021. Those findings receive an approve/ ineligible recommendation when only ineligible due to exceeding the 2021 loan limits.

New FHA and Conventional Loan Limit Takes Effect Prior To January 2022

As long as the loan amount is within DU compliance with the applicable 2022 loan limits, the AUS can be submitted or resubmitted on or after December 12, 2021. The same is true for Freddie Mac. A loan submitted through a loan prospector (LP) prior to December 13, 2021, that received in accept/ ineligible recommendation only due to a loan amount exceeding the 2022 mortgage limits is acceptable. This only holds true as long as the loan amount submitted complies with the applicable 2022 loan limits. 2022 loan limits will be applied to all case files submitted on her after December 13 for Freddie Mac. What this means is you may already utilize the 2022 loan limits on all conventional mortgage loans. Anything over the 2022 low ma’am will still fall into the JUMBO mortgage category which has completely different qualifications.

Conventional Versus FHA Loans

Since the Federal Housing Finance Agency announced the mortgage limits for 2021, we have received numerous phone calls from clients asking when they will be able to utilize the higher loan amount thresholds. For FHA loans you cannot close until 2022. FHA loan limits are based on the FHA case assignment date and that new mortgage limit only applies to case numbers submitted on or after January 1, 2022. FHA case numbers must be honored after that date or the 2022 mortgage limit will be applied. If your automated underwriting system findings were submitted before this date, the loan is NOT eligible for funding with the higher loan amounts. This is incredibly important if you need higher mortgage limits. A new file and case number must be started and assigned after New Year’s Day 2022. If this is unclear, please call Mike Gracz on 630-659-7644. Mike will be able to provide clarification as well as the mortgage limit for your specific County. You may also email [email protected].

Loan Limits on Government and Conventional Loans: No Maximum Loan Limit Cap On VA Loans

As most veterans are aware, there are no longer mortgage limits for VA mortgage lending. Blue Water Navy Vietnam Veterans Act of 2019 got rid of loan limits at the beginning of 2020. President Donald Trump signed this act into law in July 2019. However, VA entitlement is still important for VA mortgage lending. New loan limits for each county will go into effect after January 1, 2021. Entitlement is calculated based on the county limits which will go into effect on this date. Although the VA has not officially announced the maximum guarantee amount for these transactions, any loan needing to use the new loan limits must close on or after January 1, 2021. For more information on entitlement and VA mortgage lending, please call Mike Gracz at 630-659-7644.

2022 Mortgage Limits On USDA Mortgages

USDA lending is slightly different. As of today, USDA lending does not have a maximum mortgage limit. Instead, USDA loans have limits on income and the value of the home. There are no specific automated underwriting or loan delivery requirements that apply for loan limit purposes for USDA mortgages. USDA mortgages can be a bit tricky. If the home is in a USDA eligible area, you will want to utilize USDA ELIGIBILITY MAP to make sure your income and value of the home are within the allowable thresholds.

Loan Limits on Government and Conventional Loans: 2022 Mortgage Limits On FHA Loans Take Effect January 1st, 2022

If you already have a mortgage loan in process that could be outside of the 2021 loan limit but inside of the 2022 limit, you will need to start the transaction over. A new loan file must be disclosed to you. As mentioned above, if this is an FHA mortgage loan, you will need to apply after the new year to utilize the higher limits. The case number cannot be assigned down the road.

Loan Limits on Government and Conventional Loans: Cash-Out Refinance Mortgage Transactions

Loan Limits on Government and Conventional Loans: Cash-Out Refinance Mortgage Transactions

Cash-out refinances – If you are in the market for a cash-out refinance, the conventional route will already allow you to utilize the higher loan limit thresholds. Please remember, in order to utilize the higher FHA mortgage limits, you must wait to apply till January 1, 2022. This low mortgage rate environment is a great opportunity to pay off consumer debt, take out money for investments, or even buy an investment property. As the country goes through the COVID-19  turmoil, the housing market looks like it should stay strong. This could be a great opportunity to buy a foreclosed property or a multi-unit investment property. For more information on cash-out refinances, please give us a call today.

When Should I Start Preparing To Qualify For A Mortgage With A Lender

Applying for a mortgage with the 2022 mortgage limits and Gustan Cho Associates is an easy process. Technology is a huge factor in the mortgage industry and has simplified mortgage applications. We are here to assist you seven days a week. The first step to applying for a mortgage is to call Mike Gracz on 630-659-7644 and have a one-on-one customized mortgage consultation. You and Mike will go over everything from your credit profile, available down payment, monthly budget, and the timeline for closing on your new home.

How To Start The Mortgage Qualification and Pre-Approval Process

After your one on one mortgage consultation, Mike will pair you with a licensed loan officer in your state. Your loan officer will send you an application link to start the process. That loan officer will request the required documentation based on your sources of income and loan product. Once you send in the required documentation and your loan officer has your credit report verified, you will then be able to go over specific qualifications. Based on your debt to income ratio, credit score, and down payment available, a preapproval letter will be issued. If for some reason you do not qualify today, your loan officer will come up with a customized financial plan to qualify for a home as soon as possible. Buying a home is a big step and we want to make sure you buy the home of your dreams and not settle for anything less. The team at Gustan Cho Associates has worked with many clients for well over a year before they buy the right home for them.

Choosing A Mortgage Company Licensed In Multiple States With No Lender Overlays

We encourage you to follow our blogs as mortgage information is released all the time. Every year dramatic changes going to affect it could make or break your qualifications. It is important to select a loan team that is up to date on their guidelines. As mentioned above, we are available seven days a week. Even if you have been turned down in the past, we may be able to help. The Gustan Cho Associates are able to lend without mortgage LENDER OVERLAYS. With the COVID-19 coronavirus outbreak, most lenders have added requirements to their mortgage products. Luckily, we have not. We look forward to hearing from you with any mortgage-related questions and are here to help you and your family.

FHFA Increases Conventional Limits

FHFA Increases Conventional Loan Limits For 2022 from $548,250 to $647,200 effective January 2022. This is great news for homebuyers seeking Conventional loans on higher-priced homes. Fannie Mae and Freddie Mac are the two mortgage giants that set conventional mortgage guidelines. The reason why FHFA Increases Conventional Limits is due to rising home prices nationwide. There is no word on HUD, VA, USDA on when they will follow the lead of FHFA on FHFA Increases Conventional Limits. Normally when one agency raises loan limits, the others follow back to back. In this article, we will discuss and cover FHFA Increases Conventional Limits For 2022.

Conventional Mortgage Loans

For all conventional mortgage loans dated after January 1, 2022, the maximum conventional mortgage loan limits will be increasing to $647,200. This announcement was sudden notice and not all mortgage lenders will honor the new conventional loan limit increase. Gustan Cho Associates Mortgage Group will honor the new FHFA Increase Conventional Loan Limits for January 2022. We do not have any overlays on government and conventional loans at GCA Mortgage Group.

Mortgage Underwriting

Regardless of lock status, if a loan is currently approved by the underwriting department and the borrower requests to take advantage of the increased loan amount parameters, the loan must be re-submitted to Underwriting with new Automated Underwriting System Findings for consideration. All revised loan amounts are subject to the most recent guideline changes and eligibility criteria. Conventional conforming loan limits are published by FHFA.

Federal Housing Finance Agency

Federal Housing Finance Agency

The Federal Housing Finance Agency (FHFA) is the governmental agency in charge of Fannie Mae and Freddie Mac. Fannie and Freddie are the two mortgage giants that set conforming lending guidelines. In 2016, the FHFA increases Conventional Loan Limits for home loans that are sold to Fannie Mae and/or Freddie Mac since the 2008 Real Estate and Mortgage Meltdown. The Federal Housing Finance Agency is increasing the Conventional Loan Limits again for the sixth year in a row. This FHA Increases Conventional Loan Limits for 2018 is the second time since 2006.

Loan Limits on Government and Conventional Loans Increases Due To Increasing Home Prices

The conforming loan limits will increase to $647,200 which is a substantial increase of the conventional loan limit from the current $548,250. All conventional loan limits for both Fannie Mae and Freddie Mac need to be set and determined by The Housing And Recovery Act of 2008. The FHFA announced that the reason for the agency increasing conforming loan limits is due to housing values rising nationwide. Due to the increase in home prices, the Federal Housing Finance Agency is increasing the conventional loan limits for the second year in a row.

Loan Limits Increases Conventional Loan Limits Due To The Increase Of Home Prices Nationwide

The 2021 Federal Housing Finance Agency third quarter House Price Index Report revealed that home prices increase 6.8% during the third quarter of 2020 and 2021. The House Price Index Report is a date that gives an estimate for the increase of home values in the United States over the last four quarters. Conventional Loan Limits in high-cost areas as well. High-cost areas are counties where 115% of the local median home value surpasses the baseline mortgage loan limits.

Under HERA, the maximum loan limit in those “high-cost areas” is calculated as a multiple of the area median home value, while setting a “ceiling” on that limit of 150% of the baseline loan limit. According to the FHFA, median home values “generally increased” in high-cost areas in 2021, which drove up the maximum loan limits in many of those areas. Therefore, the new ceiling loan limit for one-unit properties in most high-cost areas will be $970,800 (which is 150% of $647,200) for one-unit properties in the contiguous U.S.  In 2022, the high-cost loan limit was increased to $970,800. According to the FHFA, special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $970,800 for one-unit properties, but the FHFA notes that loan limits may be higher in some specific locations. For a full look at the conforming loan limits, by county. The FHFA notes that as a result of “generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit,” the 2021 maximum conforming loan limit will be higher in all but 71 counties or county equivalents in the U.S. than it was in 2021.

Home Buyers looking for a direct lender with no lender overlays on government and conventional loans, please contact us at Capital Lending Network dba as Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at GCA Mortgage Group is available 7 days a week, evenings, weekends, and holidays.

FHFA Increases Conventional Loan Limits For 2022: UPDATE TO THIS BLOG ON Loan Limits on Government and Conventional Loans

Gustan Cho Associates Media News will keep on updating older blogs so our viewers have up to date timely accurate information when it comes to mortgage guidelines and news. We will leave older blogs intact for archival purposes. Please do not hesitate to contact us at [email protected] if you need very updated news information. The housing market has been booming for the past several years. Both HUD and the FHFA have been increasing FHA and Conventional loan limits for the past 4 years. The 2022 FHA loan limit is now capped at $420,680. The 2022 Conforming loan limit is now capped at $647,200. Even after the coronavirus pandemic hit the Nation, the housing market was not affected and was still booming. There is more demand for homes than in inventory. Many experts and analysts thought the United States was going to have a second real estate market meltdown due to the COVID-19 pandemic. This obviously turned out to be false and not true.

FHFA Increases Conforming Loan Limits On Conventional Loans For Six Years In A Row

Great News for Conventional Loan Borrowers. It is now official and was announced that the FHFA increases conforming loan limits for 2022. This means that the cap for Conventional Mortgages is no longer $548,250. The term of Jumbo Mortgages will no longer set the Jumbo Loan definition of any mortgages that are higher than $647,200. Jumbo Loans will start with mortgages starting at $647,200. Conventional Loans are called conforming loans. This is because they need to conform to Fannie Mae and Freddie Mac conforming maximum loan limit of $647,200. This is no longer the case because Fannie Mae and Freddie Mac will increase their maximum Conforming Loan Limits to $647,200 effective January 2022 under the orders of the Federal Housing Finance Agency, or FHFA.

High-Balance Conforming Loans in High-Cost Areas

FHA Increases Conforming Loan Limits For 2022 for high-cost areas is now capped at $947,800. Many counties in California are considered high-cost areas. Many California home buyers can definitely take advantage of the increase of Conforming Loan Limits for 2022. This slight increase will definitely help home buyers. Especially first-time home buyers, due to escalating costs of homes. In this article, we will discuss and cover the FHFA raising loan limits on Conforming Loans due to rising home prices.

FHFA Increases Conforming Loan Limits On Conventional Loans Due To Single Family Homes In California Sky Rocketing 

California has the highest-priced homes in the nation. California home buyers have been losing opportunities to higher home prices. The maximum loan limits on high-cost/high balance counties throughout the state. Home prices in the third quarter in the state of California have exceeded their current level of 10 years ago. It priced many would-be home buyers out of the housing market. Now with FHFA Increases Conforming Loan Limits For 2022 this slight boost brings back home buyers who had to halt their home shopping and mortgage process. Many hard-working Americans can afford the monthly housing payment. But often see it challenging coming up with the down payment on a home purchase. The term and definition of Jumbo Loans are finally changing for the first time in ten years. This is because Jumbo Mortgages are now higher mortgages that are capped at $647,200 and $970,800 in high-cost areas.

Fannie Mae And Freddie Mac

Fannie Mae and Freddie Mac are the two mortgage giants in the United States. Fannie Mae and Freddie Mac are private corporations and are called GSEs. Government Sponsored Enterprises and sets the standards for Conventional Mortgages. Banks and private mortgage lenders need to follow Fannie Mae and/or Freddie Mac mortgage lending guidelines if they want to sell the Conventional Loans they originate and fund to Fannie/Freddie. That is why Conventional Loans are also called Conforming Loans. This is because they need to conform to Fannie Mae and/or Freddie Mac’s lending rules and guidelines.

FHFA Increases Conforming Loan Limits Effective Immediately

FHFA Increases Conforming Loan Limits Effective Immediately

Effective January 2022, both Fannie Mae and Freddie Mac will be backing Conventional Mortgages that conform to their standards and do not exceed $647,200. The FHFA Increases Conforming Loan Limits For 2022 to $647,200 in most counties of the United States. The FHFA Increases Conforming Loan Limits for 2022 to $970,800 in high-cost counties from the current Conforming Loan Limit.

FHFA Increases Conforming Loan Limits Due To Buyers Being Priced Out of the Housing Market

FHFA Increases Conforming Loan Limits For 2022 will be a definite benefit for first-time homebuyers to enter the home purchase market. This is because the down payment requirements and general credit requirements for Fannie Mae and/or Freddie Mac conforming mortgages are much easier to meet than the lending requirements for Jumbo Mortgages. The FHFA Increases Conforming Loan Limits For 2022 is the sixth increase on Conventional Loans since 2006.

 Conforming Loans Versus Jumbo Mortgages

It is a known fact that the mortgage lending requirements on conforming loans are much looser than the lending requirements for Jumbo Mortgages.

Here are the advantages of conforming loans versus Jumbo Mortgages:

  • Conventional Mortgages have minimum credit score requirements of 620 FICO credit scores versus 700 credit scores for Jumbo Mortgages
  • Debt to Income Ratios on Conventional Mortgages are normally capped at 50% DTI for Fannie Mae and 50% DTI for Freddie Mac
  • Debt to Income Ratios on Jumbo Mortgages depends on the individual Jumbo Lenders
  • Most Jumbo Lenders have their debt to income ratios capped at 40% DTI while some may go as high as 43% DTI
  • Down payment requirements on Conforming Loans are either 3% down payment for first time home buyers and 5% down payment for seasoned home buyers
  • Most Jumbo Lenders require a 10% to 25% down payment
  • Mortgage rates on Conforming Loans are substantially less than those of Jumbo Loans
  • Jumbo Lenders will normally require reserves of 6 months of Principal, Interest, Taxes, and Insurance

Conforming Lenders will not require reserves unless it has been stated on the Automated Underwriting System.

Other Advantages Of Conforming Loans Versus Jumbo Mortgages

Conventional Loans offer much looser credit requirements than Jumbo Mortgages. Conventional Loans are called Conforming Loans. This is because they need to conform to Fannie Mae and Freddie Mac mortgage lending guidelines. Although Conventional Loans are private loans originated and funded by banks and private mortgage lenders, these lenders do not want to hold them in house.

FHFA Increases Conforming Loan Limits Due To High Home Prices

Lenders want to package them up and resell them to Fannie Mae and Freddie Mac. This is so they can clear out their warehouse lines of credit and reuse their warehouse lines of credit to originate and fund more Conventional Loans. However, in order for these lenders to be able to sell them to Fannie Mae and Freddie Mac, these loans need to conform to Fannie/Freddie lending guidelines. If they do not, Fannie Mae and Freddie Mac will not buy them.

Conforming Versus Jumbo Mortgages

Lenders are stuck holding these loans in their portfolios. Fannie Mae and Freddie Mac are private corporations owned by shareholders but are backed by the federal government. This is the reason they call Fannie Mae and Freddie Mac government-sponsored enterprises, or GSEs.  Jumbo Mortgages do not have set Lending Guidelines. Each Jumbo Mortgage Lenders have their own Lending Requirements, unlike Conforming Loans.

FHFA Increases Conforming Loan Limits: Guidelines On Conforming Versus Jumbo Mortgages

Gustan Cho Associates are experts in both conforming and jumbo mortgages. Mortgage qualification requirements on Conventional Loans are much easier and looser than Jumbo Mortgages.

Here are the comparisons on mortgage lending qualification requirements on Conventional Versus Jumbo Loans:

  • 4 year waiting period to qualify for Conventional Loans after bankruptcy, deed in lieu of foreclosure, and short sale
  • 7 year waiting period after foreclosure to qualify for Conventional Loan
  • Most Jumbo Lenders require a 7 year period after bankruptcy, deed in lieu of foreclosure, foreclosure, short sale
  • Conforming Loans will go off DU/LP Findings per Automated Underwriting System, AUS
  • Jumbo Mortgages will go by mortgage underwriter discretion
  • Conforming Loans can be sold on the secondary market
  • Jumbo Mortgages are normally portfolio loans.

Minimum credit scores for Conforming Loans are 620 FICO. Jumbo Lenders normally want 700 FICO. 740 FICO required for 10% down payment Jumbo Mortgages. Piggyback Mortgages of 80-15-5 permitted on Conventional Loans. CLTV can be up to 95% CLTV. Jumbo Loans, no Piggyback Mortgages are permitted

Non-QM Loans

Non-QM Loans are becoming more and more popular. There are different types of NON-QM Loans. Bank Statement NON-QM Loans are normally for self-employed borrowers. There are NON-QM Loans. As long as you have a 30% down payment and a 640 FICO Credit Score, there is no income verification/no tax returns required. There are many NON-QM Loans where there is no waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale. Jumbo Mortgages on a NON-QM Loan Program is becoming more and more popular. Gustan Cho Associates offers 95% LTV Jumbo Loans with no private mortgage insurance required.. If you have any questions on topics covered in this article or are interested in NON-QM Loan Programs or other creative Conforming and Non-Conforming Mortgage Loan Programs, please contact us at Gustan Cho Associates at 262-716-8151 or text for faster response. You can also email Gustan Cho at [email protected] . Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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