What the higher maximum mortgage amounts in 2022 could mean for you
Maximum Mortgage Loan Amounts Increased for 2022
Home buyers and mortgage shoppers in the U.S. received some good news at the end of November. In 2022, the maximum mortgage amounts for both conventional and FHA loans will go up considerably.
This means borrowers have a higher range of financing, without having to use a "jumbo" mortgage loan.
Conforming loan limits (for conventional mortgages) will range from $647,200 to $970,800 in 2022, depending on the county. FHA loan limits will range from $420,680 to $970,80. That's a substantial increase over the 2021 maximum mortgage amounts.
Higher Maximum Mortgage Amounts for 2022
At the end of November, federal housing officials announced they were increasing the loan limits for conventional and FHA-insured mortgage loans. They made this change to keep up with steadily rising home prices across the U.S.
This brings good news for borrowers. By increasing the maximum mortgage loan amounts for 2022, officials have also made it easier for home buyers to find and purchase a property.
Loan limits tend to confuse borrowers, and for several reasons. Different mortgage programs have different maximum size limits, and there's also the "jumbo" category to consider. It's a complicated topic.
So let's take it one step at a time:
Conforming Loan Limits Increased for 2022
"Conventional" mortgage loans do not receive government insurance or guarantees. This separates them from the government-backed loan programs, like FHA and VA.
In terms of their size, conventional loans can either be conforming or jumbo:
• Conforming: These loans fall within the size limits used by the mortgage buyers Fannie Mae and Freddie Mac, and can therefore be sold to those organizations.
• Jumbo: These loans exceed the conforming loan limit and therefore cannot be sold to Fannie and Freddie. Due to their size, jumbo mortgages tend to require larger down payments, higher income levels, etc.
The increases mentioned above relate to conforming loans, in particular. Housing officials have increased the 2022 maximum mortgage amount for conforming loans. This means home buyers can "go bigger" with their financing without crossing into the stricter jumbo category.
In 2022, the conforming loan limits will range from $647,200 to $970,800. These limits vary by county because they're based on home values. Most U.S. counties fall within the "baseline" range of $647,200. The $970,800 maximum mortgage amount for 2022 applies to pricier real estate markets, like San Francisco and New York City.
FHA Loan Limits Also Went Up
The conforming limits mentioned apply to conventional mortgage loans, which are not insured by the government. There's a separate set of limits for FHA-insured home loans, and they've also been increased for 2022.
According to the Department of Housing and Urban Development, the 2022 maximum mortgage amount for FHA loans will range from $420,680 to $970,800. Again, these limits vary based on the county where the property is located.
You can find the maximum FHA mortgage amount for your county by visiting the HUD.gov website. If you have any questions about applying for a loan, feel free to contact our staff.
A Response to Rising Home Prices
Home prices nationwide rose significantly in 2021. That's why housing officials increased the maximum mortgage amounts for 2022.
The median home value in the U.S. rose by around 18% during 2021, well above historical norms. Cities with red-hot housing markets recorded unprecedented gains of 30% or more.
This is something home buyers should be aware of, going into 2022. On one hand, buyers could encounter higher prices over the coming months. But they'll also have more financing "room," thanks to the recent increase in maximum mortgage amounts for 2022.
Borrowing More With a Jumbo Mortgage
It's possible to borrow more than the limits mentioned above. Well-qualified borrowers with sufficient income can use a jumbo loan to purchase a more expensive home.
You'll recall from earlier that a "jumbo" mortgage product is one that exceeds the conforming loan limit for a particular county.
In much of the U.S., jumbo loans are rare because there aren't that many homes that exceed the maximum conforming mortgage amount. But in more expensive real estate markets, borrowers frequently use jumbo loans to finance their purchases.