Loan Limits To Be Significantly Increased In 2022
Conforming Loan Limits will be increased to help improve purchasing power for home buyers
What is a conforming loan?
A conforming loan is a loan that meets the requirements to be purchased by Fannie Mae or Freddie Mac. The most common and well-known criteria is the loan amount. Simply put, a conforming loan is a home loan that doesn’t exceed a specific home price.
Conforming loan limits will be significantly increased in 2022
The Federal Housing Finance Agency (FHFA) just announced its 2022 limits for conforming loans. The limit is increased each year to match housing prices across the country, which means a significant increase in loan limits from 2021.
For one-unit properties, the new conforming loan limits to be acquired by Fannie Mae and Freddie Mac in 2022 will be $647,200, which is an increase of $98,950 from $548,250 in 2021.
For high-cost areas, where 115% of the local median home value is higher than the conforming loan limit of $647,200, the new loan limit will be $970,800.
So, what does this mean for homebuyers?
In 2021, home prices across the nation skyrocketed, and many homebuyers were unable to receive Conventional Loans due to the conforming limits that were set for the year. This forced many homebuyers to turn to different types of loans such as Jumbo Loans, or government-backed loans with higher interest rates and strict requirements.
With the increase in the new conforming loan limit, home buyers will be offered a wider array of loan & purchasing options. Homebuyers can now borrow more money without the need for a jumbo loan and instead, use a conforming loan which offers increased flexibility in loan requirements, lower interest rates, & down-payments as low as 3 percent!* The changes do not take effect until January 1st but a RanLife Expert could help you today.
Conforming Loan Benefits
Conforming loans do have some advantages over nonconforming loans.
- Are often easier to qualify for.
- Can have a lower mortgage interest rate.
- May accept a lower down payment.
- Can allow for some wiggle room with credit scores.
While conforming loans do offer benefits, they may not be the right fit for everyone. RanLife Home Loans’ experts are here to help make sure you have the best loan for your needs and financial situation. Fill out the form below to speak with an expert and an expert will help you turn your dream into an address.
*OAC & some restrictions may apply.