What the 2022 Loan Limits Mean for You

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• Guidelines, Rates & Rules for FHA Loan Limits in 2022 •

Earlier this month, the Federal Housing Finance Agency or FHA, announced that the maximum baseline conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac will rise in 2022.

In most of the United States, the conforming loan limit for one-unit homes will increase from $548,250 in 2021 to $647,200 in 2022 — a jump of 18 percent, which is a solid testament to the hot housing market of 2021.

Conforming loans are typically viewed as some of the most user-friendly loans around. This increase marks the 6th consecutive year of increased mortgage loan limits — a welcome contrast from 2006 to 2016, when the ceiling remained flat and unchanged. An increase in conforming loan limits is a positive sign that home values in the United States are on the rise.

The 2022 Conforming Loan Limits Increase

Thanks to increases in property values in 2021, the 2022 conforming loan limits for a one-unit property are going up nearly $100,000. Here’s a quick breakdown:

what the new 2022 loan limits mean for you

As you can see, the loan limits are even higher for multi-unit properties and high-cost areas such as Coastal California. These new loan limits could translate to lower mortgage rates for aspiring homeowners, especially given the current market conditions and its competitive environment.

National Baseline

Thanks to the Housing and Economic Recovery Act (HERA), the baseline conforming loan limit is required to be adjusted every year to reflect the change in the average home price in the United States. Earlier this week, the FHFA published its 3rd Quarter 2021 FHFA House Price Index report, which included a statistical increase in the average US home price over the last four quarters. This statistical data showed that the average house price increased just slightly over 19 percent year to year; therefore, the conforming loan limit will increase by the same percentage.

High-Cost Area Limits

The loan limit raised even more for certain high-cost areas, such as California, where 115 percent of the local median home value exceeds the baseline conforming loan limit. The Housing and Economic Recovery Act (HERA) establishes this high-cost area limit as a multiple of the area median home value while setting a limit or ceiling at 150 percent of the baseline limit. For instance, in these areas in 2022, the new ceiling loan limit for a one-unit property will be $970,800 — which is 150 percent of $647,200.

What the New Limits Mean for You

If you’re wondering what these new limits mean for you, you’re not alone. The short answer is that this is great news — especially if you’re considering buying a home. If you’re in the market to purchase a home, a higher conforming loan limit may allow you to put less money  toward a down payment or purchase a larger home without having to secure a “jumbo loan” or high balance loan.

These types of loans usually have stricter income underwriting, a higher interest rate for lower down payments, and specific requirements for cash and assets that the borrower has in reserves. Additionally, they can also take longer to close than conventional loans.

In other words, a higher conforming loan limit gives more buyers greater buying power and can help avoid potential headaches during financing. If you’ve been trying to qualify for a home loan but have been unsuccessful securing a jumbo loan, you may now be eligible to qualify for a conventional loan.

The Bottom Line

Now is the time to start the mortgage process so you are ready to buy once these limits change in January. At Reali, we offer lower rates with faster closings, which means happier homeowners. In fact, the average Reali Loans customer saves $20,000 over the life of their loan versus our competitors.

When you’re ready, apply online and move at whatever pace you’re comfortable with. Questions? We’re here to help.

The Bottom Line

Call us at (858) 880-0195 or email portia.green@reali.com to get started with Reali today.

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About The Author
Portia Green, REALTOR®

Portia Green is a highly experienced full-time REALTOR® specializing in the representation of Sellers, heralded by her clients as data-driven and an effective negotiator. Producing $25M total in residential sales volume, Portia's goal is to help her clients achieve the best results when selling their homes and to make their experience an enjoyable one. She has successfully sold real estate since 2008 and has gained an in-depth knowledge of local real estate markets & seasonal trends. Portia has achieved a 100% customer satisfaction rating and wants to share her expertise & personal service with you in the sale of your home. When listing your home with Portia Green and Compass, you'll receive the hands-on service you need and desire. Portia will help you manage the entire process of selling your home from pricing, preparing and staging the house, to marketing, negotiating offers, inspections, all the way to closing. She will recommend skilled vendors for any job needed, personally host Open Houses, and ensure that all showings are accompanied. At Compass, Portia offers a wise no-nonsense way to sell your home for the best price and the least hassle. With a keen eye for staging & preparing listings to maximize Buyer appeal, all of Portia Green's listings are professionally photographed using HDR (High Dynamic Range) photography to provide the highest quality photos in the industry. Professionally printed marketing materials are prepared for all Open Houses. We also capture a 3D scan of your home that creates an interactive walkthrough online along with a custom-designed floor plan and targeted digital marketing campaigns on Google & the most popular social media channels. Compass participates in the Multiple Listing Service, which is the local real estate database of homes listed for sale that all REALTORS® use in helping their Buyers find houses. Your home will appear on every real estate website, in its best light, making a stunning camera-ready debut. Portia Green's home valuation expertise and extensive experience in comparative market analysis will help price your home accurately. She has refined her skills to help you pinpoint which features of your home will result in more showings and better results. Her mantra is for you to be ready to sell your home and feel good about that first. Portia knows that home inspectors always find a problem; that drones take some of the best photos in town; and that her eyebrows will grow to the floor in the time it takes her to read everything that's happening with your HOA, but that doesn't mean she won't do it anyway. Eyebrows be damned. You'll always need a place to unplug, connect, dream, grow, or just be yourself. That makes what Portia does even more meaningful. She’s ready to go the extra mile to help you find just the place. Whether you're selling your very first home, offloading an investment property, or want a vacation getaway with passive income, she is attentive to the details of every home sale. Portia helps busy people navigate this crazy real estate market like a pro, so don't be shy. Every great relationship starts with free advice and a friendly chat. Ask as many questions as you need to. Selling houses is her jam! www.portia.realtor