Each year toward the end of November, FHFA (Federal Housing Finance Authority, the agency overseeing Fannie Mae & Freddie Mac) releases updated loan limits for the following year. This sets the maximum amount of money that can be borrowed under conventional lending guidelines. Today’s announcement informed us that for 2022, conventional loan limits will be increased to $647,200 (from their current 2021 $548,250 limit) nationwide, and up to $970,800 in high cost counties (from current $822,375 limits).
These changes represent an increase in area median home prices, and county changes are based on local rates of appreciation. These changes should allow home buyers more flexibility and more favorable loan terms in areas where home prices have seen increases over the past year. One major perk of using conventional financing is the ability to finance up to 95% of a home purchase, having only a 5% down payment requirement. For some borrowers and situations, conventional loans require only a 3% down payment, making it possible to achieve the goal of home ownership without bringing in a larger down payment that many jumbo loan products require.
Another perk of conventional financing is competitive rates and mortgage insurance terms for those with excellent credit. For those with good (but not exceptional) credit, conventional financing is another great option, since most jumbo financing options either require excellent credit (leaving those without excellent credit with minimal options), or coming with higher rates.
2022 loan limits are in effect for loans delivered to Fannie Mae & Freddie Mac in calendar year 2022, but loan applications can begin being processed under the new loan limits effective immediately. Your MasonMac loan officer can further explain how the increase in loan limits may be able to assist you in getting better loan terms or qualifying for more home.
For an interactive map that shows loan limits for your specific county, you can click here . If you have questions on how these loan limits can help you, or any other mortgage related questions, you can ask an expert here.