While the 2022 conforming loan limits won’t be officially announced until late November, some mortgage lenders are already upping their maximum loan amounts in anticipation.
Both PennyMac and United Wholesale Mortgage have announced increased loan limits effective immediately, despite it being early October.
This is great news for prospective home buyers (and existing homeowners) who have loan amounts that slightly exceed the current 2021 loan limit.
In short, conforming loans backed by Fannie Mae and Freddie Mac tend to price lower than jumbo loans.
So this might mean better mortgage rates for more homeowners, which could be especially impactful given the recent climb.
They are also generally easier to qualify for than jumbo loans, a potential boon to those on the cusp of approval.
2022 Conforming Loan Limits Likely to Be a Lot Higher
Thanks to surging property values, it’s now possible to get a conforming loan amount up to $625,000 on a one-unit property.
As a result, a home buyer could purchase a home for $781,250, put 20% down, and avoid the jumbo loan realm.
And an existing homeowner looking to refinance a mortgage could save some more money by slipping below the conforming limit.
In Alaska and Hawaii, these loan limits will be $937,500, up from $822,375 currently.
And on multi-unit properties, the loan limits are even higher, from $800,250 up to $1,202,000.
Each year, the Federal Housing Finance Authority (FHFA) adjusts the conforming loan limit based on home price movement from the third quarter of the prior year to the next.
Because 2021 has been an absolute monster of a year for the housing market, the agency is widely expected to increase the conforming loan limit substantially.
In fact, it could end up even higher than the $625,000 limit some lenders are adopting ahead of time.
This is probably a given as these companies wouldn’t want to overshoot the mark and be stuck with loans that aren’t saleable to the GSEs.
Home prices have already increased around 20% over the past 12 months, so the loan limit could be greater than $650,000 when all is said and done.
Who Is Offering the 2022 Conforming Loan Limits Today?
At the moment, at least two major mortgage companies have made announcements regarding the 2022 conforming loan limit.
Interestingly, one is a wholesale mortgage lender that works exclusively with mortgage brokers.
And the other is a correspondent lender, which offers its products to smaller banks, lenders, and credit unions.
United Wholesale Mortgage (UWM) said it will honor the 2022 conforming loan limits ahead of the FHFA November announcement.
They are the nation’s #1 wholesale lender, so there’s a good chance your mortgage broker works with them (if you decide to go the broker route).
Meanwhile, top correspondent lender PennyMac (formerly Countrywide, kind of) announced it will offer conforming high balance loan amounts up to at least $625,000 in all states and counties.
But they said counties that have 2021 high cost loan limits that already exceed $625,000 will not change at this time.
Additionally, it seems they will price these loans as conforming high balance, which means interest rates could fall between a conforming loan and a jumbo.
Still, it could mean more loan approvals for those unable to get a jumbo loan, perhaps due to a down payment or home equity shortcoming.
UWM didn’t specify pricing on the loans, but they could be offering theirs at conforming prices, which is an even better deal.
This move could offset the recent hike in mortgage rates, which together with rising property values are eroding affordability for perspective home buyers.
Look out for more lenders to adopt the 2022 loan limits ahead of time. If you think they’ll help your situation, they might be worth getting a quote from.
Or simply get in touch with a mortgage broker that is approved to work with UWM.