2022 Conforming Loan Limits | What Does This Mean for You?
We knew the 2022 conforming loan limits would jump. But no one knew how high until the FHFA’s official announcement. You may have caught the buzz about the near $99,000 increase, but what does it actually mean to you?
First, Why Should You Know the Limit?
Loans above the conforming limit are called Jumbo Loans. Jumbos cannot be backed by Freddie Mac, Fannie Mae, or the FHA. In other words, they are “privately held.” That said, Jumbo Loan investors tend to have stricter credit, reserves, and down payment requirements. If a borrower faces obstacles to qualifying for a Jumbo loan, they will need to put more money down in order to get their loan amount under the limit. Which brings us to the first benefit of 2022’s conforming loan limit…
$100k Raise in the Budget
The higher the limit, the less a buyer needs to put down in order to reach conventional loan status. Conversely, buyers can raise the budget significantly with the same down payment. To illustrate:
Let’s say a buyer has $33,750 to put down. In 2021, the buyer can set their budget at $575,000 and take out a conforming loan. In 2022, bump that budget up to $675,000, put the same $33,750 down, and you have a conforming loan at still historically low rates. Can you imagine all the things you can cross off the wishlist with a $100,000 raise in the budget?
Reserves and credit scores might be the more notorious obstacles to qualifying for a Jumbo Loan. And while UHL prides itself on offering the most flexible Jumbo options around, these requirements still exist. Continuing the thought from the down payment section above: Buyers have a lot more wiggle room in the budget before they need 3-6 months of reserves and a credit score of 700+ to qualify for a loan.
Meanwhile, across the country…
For our Tennessee, California, and Colorado readers, the news gets better and better. The conforming loan limit is applied per county in order to adapt to higher housing costs in certain areas. The greater Nashville area will enjoy a nearly $700,000 limit in 2022, and some counties in California will see limits close to $1M.
2022 Conforming Loan Limits
The loan limit is also adjusted according to the number of units in a residential property. For the majority of the country, $647,200 is the limit for a single-family home. But if you are looking to purchase a 2, 3, or 4-unit property, limits will be higher.
This is very exciting news for us in the industry, as we imagine all of the possibilities. Now, we’d love to hear what opportunities await your unique scenario! There’s more to talk about (like, FHA limits and Jumbo down payment thresholds). If you’re interested in diving into a 2022 gameplan, let’s talk.