New 2022 Loan Limit Increases Make It Easier to Buy Larger Homes
New federal guidelines are making it easier than ever to get larger home loans in 2022.
The Federal Housing Finance Agency (FHFA) announced increases to the loan limitations on conventional / conforming loans in response to rapidly increasing home values.
Current guidelines are set at $548,250 and are being raised to $625,000. These changes mean that many loans which were previously considered jumbo loans in underwriting terms can now be considered for more favorable terms on conventional programs.
If you’ve been considering buying a larger home or refinancing your jumbo loan into a conventional option, this may be your chance!
Understanding Loan Products & Limits
Traditionally speaking, a conventional (or sometimes called conforming) loan has been the gold standard for home loans with the most favorable rates and terms.
If you have good credit and acceptable income documentation, a conventional loan affords the lowest interest rates along with flexible down payment options.
However, there are limits to the amount of money you can borrow on a conventional loan.
Once your loan amount exceeds current limits, your loan may fall into the category of a jumbo loan.
Jumbo loans typically carry more stringent qualifying guidelines such as larger down payments, slightly higher interest rates and increased reserve requirements to name a few. Speak to a loan officer near you for more information on jumbo loan specifics.
The recent loan limit changes mean more loans qualify for conventional pricing and guidelines that may have previously been considered jumbo loans.
Market Driven Increases
The primary function of the FHFA is to ensure Americans have reliable home financing options throughout the economic cycle. As such, the organization often makes changes in response to changes in the housing market.
Given the rapidly increasing home values over the last few years in the post-COVID environment, it’s easy to understand why increasing loan limits have been necessary.
These loan limit increases won’t likely have much of an impact on first-time home buyers, but they are expected to help those wanting to move into larger homes or even refinance existing jumbo loans into more favorable terms.
Don’t Wait to Get Started
The new loan limit increases are set to take effect in January 2022, but you don’t have to wait until then to find out how the changes may impact your lending options.
We can process your loan applications now utilizing the new CLL increase.
If you’re interested in qualifying for a home loan or a refinance loan on your home using the new loan limit guidelines, our loan officers are here to help you understand your options and get the best mortgage for your individual needs.