Conventional Loans Just Got A MASSIVE Upgrade (2022 Loan Limits)

Certified Mortgage Advisor
NMLS 1701021
December 1, 2021

Conventional loans massive upgrade!

It is finally here. It looked like we weren't going to get it, but we finally have 2022 loan limits that just changed. FHFA, basically oversee Fannie Mae and Freddie Mac who then give out the rules for conventional loans.

The changes

They change the amount of the maximum amount that you can take as a loan each year. Usually, it continues to increase and increase and increase as the years go on.

2022 Base Loan Limit Update

This year, we have an update that it is now $647,200. And 2021, it was 548,250. We have an 18% increase to $647,200 as of the base loan limit for 2022. So what that then means is that's just the loan, the purchase price is actually higher.

So with conventional loans, if you're a first-time buyer, you can do 3% as a minimum down payment. That means in 2021, the maximum price with 3% down was $565,206. Now there's a $102,000 increase up to a max purchase price with a 3% down on a conventional loan of $667,216.

Why such a big increase?

In this growth in the max loan limit, it makes sense, because we can see the median sale price for homes sold in the US right now that are hovering around $404,000. If we looked around this time last year, Q3 of 2020, that was 337, 500. And so we had this huge increase in home prices. So it makes sense that the loan limit then increases.

The Benefit

The big benefit of this is that normally in 2021 if you had a home purchase price that was above this or a loan limit, that was above 548, you needed to get a jumbo loan, usually a higher down payment. You need a higher credit score. It's a lot tougher to qualify for a jumbo loan.

However, now with this increase, more people are able to go up another a hundred thousand dollars in purchase price without having to get into a more complicated loan. It's easier to qualify for.

So likely home prices around this price range. We'll probably see some more competition with people being able to have easier access to conventional loans instead of a jumbo loan.

Loan Limit Map

Then I have a link: for the conforming loan limits for 2022 in the description because this changes across the US. On the map, all the ones in gray are a loan limit of the base loan limit of 647,200.

High Cost of Living areas

However, there are different pockets of the US where that changes and what are called High Cost of Living areas. And basically what this means is the loan limit then increases. For example, you will see a little pocket down in Tennessee, it goes up to anywhere from, that 647,200 to 700,000, depending on which county you're in. In some markets going up to 97,800.

If you're in that price range to qualify with a conventional loan, with a lower down payment than going with something that's a little bit more difficult, like a jumbo loan.

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