This morning, the 2022 conforming loan limits were officially announced by the FHFA, with the baseline limit hitting a whopping $647,200.
Prior to this announcement, some mortgage lenders had already upped their maximum loan amounts in anticipation.
Both PennyMac and United Wholesale Mortgage increased loan limits to $625,000 back in early October, knowing they’d be safe in doing so due to massive home price gains.
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, and can be easier to qualify for.
2022 Conforming Loan Limit Up Nearly $100k From Last Year
- One-unit property: $647,200
- Two-unit property: $828,700
- Three-unit property: $1,001,650
- Four-unit property: $1,244,850
Thanks to surging property values, it’s now possible to get a conforming loan amount up to $647,200 on a one-unit property.
As a result, a home buyer could purchase a home for $809,000, 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.
And on multi-unit properties, the loan limits are even higher, from $828,700 up to $1,244,850.
This might mean lower 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.
In Alaska, Guam, Hawaii, and the U.S. Virgin Islands, the base loan limit will be $970,800, up from $822,375 currently.
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 was able to increase the conforming loan limit substantially.
2022 High-Cost Loan Limit Rises to Nearly $1 Million
- One-unit property: $970,800
- Two-unit property: $1,243,050
- Three-unit property: $1,502,475
- Four-unit property: $1,867,275
For those who live in a so-called high-cost area, the 2022 loan limit will be set at 150% of the national conforming loan limit.
That means a loan amount of up to $970,800 for a one-unit property in places like Jackson Hole, Los Angeles, San Francisco, or Washington D.C.
And if you’re buying or refinancing a multi-unit property, the loan limit could be nearly $2 million.
These higher limits are also available in Alaska, Guam, Hawaii, and the U.S. Virgin Islands.
In other words, despite big home price gains, most borrowers across the country should be able to avoid a jumbo loan.
As noted, this should make it generally easier to qualify for a home loan, and lead to better loan pricing.
Who Was Already Offering the 2022 Conforming Loan Limits?
Back in October, two major mortgage companies made announcements regarding the 2022 conforming loan limit.
Interestingly, one a wholesale mortgage lender that works exclusively with mortgage brokers.
And the other a correspondent lender, which offers its products to smaller banks, lenders, and credit unions.
United Wholesale Mortgage (UWM) said it would 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 would 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 would not change at that time.
Additionally, it seemed they were pricing these loans as conforming high balance, which meant interest rates could fall between a conforming loan and a jumbo.
Still, it may have led to 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 have been offering theirs at conforming prices, which is an even better deal.
Rocket Pro TPO, Homepoint, loanDepot wholesale, and Finance of America also joined the growing list of lenders offering the higher, prospective $625,000 conforming loan limit before this official release.
Regardless, the actual 2022 conforming loan limits are now likely live for all banks and mortgage lenders as it’s nearly December.
This move could offset the recent hike in mortgage rates, which together with rising property values are eroding affordability for perspective home buyers.