The Federal Housing Finance Agency (FHFA) announced the new conforming loan limits for 2022 this week. Conforming loans are mortgage loans that can be acquired by Fannie Mae and Freddie Mac. These are mortgage loans that meet a number of specific standards set by the FHFA. Because these loans are backed by government housing agencies, they set loan limits to minimize risk.
2022 Conforming Loan Limits
The new conforming loan limit in most U.S. counties will be $647,200 as of January 1, 2022. This is an increase of $98,950 from the $548,250 amount for 2021. This significant increase is no surprise because home prices have risen so much over the past year with high buyer demand and limited supply.
The FHFA also posted third quarter updates to its House Price Index (HPI) and its expanded-data HPI (which is slightly different from the regular HPI). The expanded-data index showed an average home price growth of 18.05% across the country from Q3 2020 to Q3 2022. This percentage is what they use to set the new conforming loan limits. In other words, the conforming loan limit for 2022 was raised by 18.05%.
The same conforming loan limits do not apply to all areas or all types of properties. For example, properties with two units will have a conforming loan limit of $828,700 in 2022. Three-unit property loans will go up to $1,001,650 and four-unit properties in most counties will have a limit of $1,244,850.
High-Cost Area Loan Limits
There are also counties designated by the FHFA as “high cost” areas because 115% of the local median home value exceeds the baseline conforming loan limit. This includes San Diego County, Orange County and Los Angeles County. Loan limits in high cost areas will vary based on the median price levels. However, they are capped at a maximum amount of $970,800, which is 150% of the baseline conforming loan limit. For Alaska, Hawaii, Guam and the U.S. Virgin Islands, the baseline loan limit will be $970,800 for one-unit properties.
There are only four counties in the United States where the conforming loan limits will not increase in 2022. They did not see enough price increase in 2021 to warrant higher limits. As you can imagine, none of those are in Southern California!
Are You Ready to Buy or Refinance?
Home prices here continue to soar while mortgage rates remain at historic lows. Inflation will likely drive rates upward as time goes on, so now is a great time to buy or refinance with Transparent Mortgage if you are looking to move soon. Contact me today to discuss your mortgage options and to lock in a rate that is best for you. Call me directly at (858) 761-7795 or email me at jj@tspmortgage.com
JJ De Villiers
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