Friday, January 21, 2022 / by Amber Folger
Interest rates are not the only thing shifting this year in the housing market. We are also facing the highest nationwide loan amount increase in the history of loan limits, meaning the government is recognizing that home values are on the climb and will remain on the climb for the remainder of the year. I got the chance to speak with Genna Lott at Supreme Lending, where she further explained the loan amount increase, and how that will affect buyers this year.
Depending on the amount of money you need to borrow when purchasing your home, you will fall under a conforming loan or non-conforming loan. The Federal Finance Housing Agency (FHFA) sets loan limits that are eligible for purchase by Fannie Mae and Freddie Mac, which are considered conforming loans. Loan limits that exceed these limits are considered non-conforming jumbo loans.
Conventional, or conforming loans, have standard guidelines that have to be followed for all lenders, thus making them easier to get approved for versus the non conforming jumbo loans. The conventional conforming loan amount for 2021 was a loan amount at, or below, $548,250 in most counties in the United States. The FHFA has increased that number to $647,200 for 2022.
As the conforming loan limits increase, the Jumbo loan threshold increases as well. Genna states that the conventional lending limit has increased from $548,250 to $647,200. Meaning that a first time home buyer could essentially purchase a home for $667,215 with a 3% down payment and not have to qualify for a jumbo loan. This changes things for most consumers, as they will have more buying power to purchase homes at the increased amounts that this year predicts.