The new conforming loan limits for 2022 are coming, and they're going to be a big change. This is because the federal government has increased them from $715,000 to $1,376,000 for single-family homes in most areas of the country. Mortgage loans will also be changing significantly in 2022. For example, homebuyers with good credit scores who put down at least 10% on their new mortgages can get up to $726,525 of mortgage debt without having to pay PMI (private mortgage insurance).
What is a Conforming Loan Limit?
Conforming loan limits are the maximum amount of debt that the federal government will guarantee for a mortgage loan. Specifically, it is the dollar cap on the size of a mortgage that the Federal National Mortgage Association (known to most as Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac) will purchase or guarantee.
This limit is determined by the Housing and Economic Recovery Act of 2008, which sets it at 115% of the median home price in each area of the country. The new conforming loan limits for 2022 are based on data from 2019, and they reflect an increase in housing prices.
In the past, some “non-conforming loans” have been available from Fannie Mae and Freddie Mac as a result of their "jumbo" loan programs. The limit for those mortgages was $484,350, but they will not be an option after 2022.
Goodbye Jumbo Loans
In the past, Jumbo Loans were a way for people to get more money for their home purchases, but with the new conforming loan limits for 2022, this will no longer be the case. As of January 2022, Fannie Mae and Freddie Mac will only offer standard mortgages up to $679,650.
This means that anyone looking to buy a home in an area where the conforming loan limit is $679,650 or less will need to follow the guidelines for standard mortgages. For example, in Los Angeles County (where homes are expensive), which has a conforming limit of $679,650 according to 2019 data, homebuyers who want Fannie Mae and Freddie Mac to finance their loans can only borrow up to $679,650 without paying PMI.
Homebuyers who want a mortgage larger than the conforming loan limit will have to go through another lender that can offer non-conforming mortgages with higher limits to get their loans approved.
What Changes in Conforming Loans Will Mean to You
The higher conforming loan limits for 2022 are likely to be good news for many homebuyers. This is because they will now have a larger pool of mortgages available to them that don't require PMI. Additionally, the new mortgage rules coming into effect in 2022 should make it easier for people with lower credit scores to get approved for a mortgage.
In Summary: The new conforming loan limits for 2022 are coming, and they're going to be a big change. This means that more borrowers can qualify for a mortgage in 2022 than ever before. There are three different types of loans available in 2022: FHA Loans, VA Loans, and Conforming Loans. To learn more about how these changes can help you and which type of loan is best for you, contact our experienced team at Texas United Mortgage.