December 20, 2021

FHFA Announces Higher Conforming Loan Limits in 2022

Each year the Federal Housing Finance Agency (FHFA) adjusts the conforming loan limit in order to keep pace with the average U.S. home price. While the limit remained stagnant through the middle 2000’s, this upcoming year marks the sixth in a row that homebuyers are seeing an increase.

The new 2022 baseline conforming loan limit is $647,200. This applies in the majority of counties across the United States. For areas in which 115% of the local median home value exceeds the baseline (such as Nashville or San Francisco), conforming loan limits will be higher

Timeline Conforming Loan

Conforming vs. Non-Conforming

Conforming loans are those eligible for backing by government-sponsored enterprises, like Fannie Mae or Freddie Mac. Loans higher than the conforming loan limit are considered non-conforming; and cannot be guaranteed by government-sponsored enterprises. They are, instead, backed by private lenders. Loans larger than the conforming loan limit are called jumbo loans.

When Do You Use a Jumbo Loan?

Jumbo loans can provide a solution for all types of borrowing situations. This includes refinancing your existing home, purchasing a home, and even investment properties. They often allow you to take advantage of low jumbo rates, without depleting your cash reserves.  Borrowers have their pick of jumbo loan options, like a 30-year fixed or ARM.

How Do I Know if I Qualify?

Just as with conventional loans, borrowers will need to show proof of income, cash reserves, and decent credit history. Without going into too much detail on the jumbo-specific requirements, the following criteria for jumbo borrowers should be met:

  • Minimum credit score of 700
  • 43% or lower Debt-to-Income ratio
  • At least 10% down

If you are a first-time homebuyer, in particular, you may want to investigate some of the other ways you can qualify for a jumbo loan. It is important to keep in mind that few obstacles are insurmountable once you are working with a lender. For example, our Doctor Loan Program allows new physicians to take out jumbo loans- even while paying off medical school. 

If you are interested in learning more about Jumbo Loans, we have the knowledge and experience to guide you. Get a quote or contact one of our mortgage experts today.

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