The Federal Housing Finance Agency (FHFA) recently announced the conforming loan limits (CLL) for 2022 which ended up being the largest loan limit increase. The conventional conforming loan limit was raised to $647,200 for one-unit properties, an increase of almost $100,000 more than the previous limit. For more expensive housing markets and multi-family properties, the limit is even higher.
This means that homebuyers can now get a conventional mortgage to purchase a home for up to $647,200. Before this increase, a loan amount of that size would have had to be a jumbo loan. Jumbo loans usually involve more strict credit requirements and a larger down payment. Increasing the limit for conventional loans allows homebuyers to borrow more money without having to follow those strict requirements found in a jumbo loan.
Increasing loan limits on conventional loans allows a more flexible and manageable loan option for people looking to buy a home. Some of the benefits of conventional loans are:
• Lower down payment options
• More flexible credit score requirements
• Options for fixed-rate or adjustable-rate mortgages
• Avoid mortgage insurance by providing a 20% down payment
The Federal Housing Finance Agency is the entity that oversees Fannie Mae and Freddie Mac, the two largest mortgage investors. According to the FHFA, home prices increased 18.5% in the last year. Without an increase in loan limits to keep up with the increase in home prices, many borrowers would struggle to obtain a home loan. But with this update, a broader group of borrowers can qualify for conforming loans backed by Fannie Mae and Freddie Mac.
In today’s market, it’s a great time to take advantage of low rates and larger loan limits. Now it’s even easier to purchase the home of your dreams while enjoying the flexibility of a conventional loan. To learn more about conforming loan limits, conventional loans, or what options are right for you, contact us today.
Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.