Lenders are limited by how much they can lend to borrowers if they want their loans to conform to the standards set by the Federal Housing Finance Agency (FHFA). Loans that meet these standards are called conforming loans. Each year, the FHFA updates the dollar limit on what it considers to be conforming loans. The limit has just been raised by over $75,000, which increases the amount of money you can borrow easily when buying a home!

 

What will be the conforming loan limit in 2022? Surging home prices during 2021 caused the FHFA to increase the conforming loan limit for 2022. Most mortgage lenders are already offering what they are calling conforming loans with a $625,000 limit, which is $76,750 above the 2021 conforming loan limit. The 2022 conforming loan limit isn’t official until late November 2021, but obviously many lenders are already confident about this number.

How does a higher conforming limit affect me? Any mortgage above the conforming loan limit is known as a non-conforming or jumbo mortgage. This type of financing often has a higher interest rate because it is at a higher risk for the lender. This means that a higher conforming loan limit saves you money!

What are my options if I need a larger loan amount? If you can’t or don’t want to seek out a jumbo mortgage, then as a home buyer you need to stay within the conforming loan cap. To do this, you can increase the down payment to lower the financed amount and meet the conforming loan limit. Another option is to take out two loans, like a Federal Housing Administration (FHA) loan and a conforming loan.

 

Every lending situation is unique to the borrowers. Lenders look at your credit and a number of other factors. If you’re thinking of buying and/or selling, touch base with Agents, Miles Rost or Nicole Laufenberg. We can also recommend trusted lenders to help you with the process.

You can visit our preferred vendor page to view the lenders we work with {{ HERE }}.

 

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