Credit limits will be expanded in 2022
As the historic rise in home prices dominated the past year, the mortgage limits for 2022 will rise.
Qualified borrowers can take out larger loans backed by the federally sponsored companies – Fannie Mae and Freddie Mac – the Federal Housing Administration and the Department of Veterans Affairs.
To buy a single family home in 2022, you can borrow in most areas of the United States, up to these limits:
Conventional Loan – $ 647,200FHA Loan – $ 420,680VA Loan – No Credit Limit
However, you may have the option to borrow more if you live in a medium to high cost area. In these areas, the 2022 compliant and FHA loan limits are close to $ 1 million.
Confirm your actual credit limit using the link below.
Check your new credit limits for 2022. Start here. (December 4, 2021)
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Conventional credit limits for 2022
The Federal Housing Finance Agency (FHFA) announced the maximum compliant credit limits for all mortgages Fannie Mae and Freddie Mac purchased in 2022.
For reference, over 60% of home purchase loans are conventional mortgage loans, so these credit limits apply to most US homebuyers.
Low cost areaMedium cost rangeHigh cost area1 unit$ 647,200 $ 647,201- $ 970,799 $ 970,8002 units$ 828,700 $ 828,701 $ 1,243,049 $ 1,243,0503 units$ 1,001,650 $ 1,001,651 $ 1,502,474 $ 1,502,4754 units$ 1,244,850 $ 1,244,851- $ 1,867,274 $ 1,867,275
The maximum conventional single-unit home loan limit in 2022 was $ 647,200 for most of the country. That's a jump of $ 98,950, or about 18%, from $ 548,250 in 2021.
The credit limits for apartment buildings have been increased similarly. Duplexes rose to $ 828,700; three units up to $ 1,001,650; and four units at $ 1,244,850.
However, the limits vary by geography and have higher caps in areas of medium and high cost.
"The conventional compliant limit will be the same everywhere, while the high balance will vary from county to county," said Jonathon Meyer, The Mortgage Reports credit expert and licensed MLO.
“In general, conventional compliant tariffs always have the best price. For people who bought before the changes this year and had to get a high balance loan, they might want to contact a lender to see if they can get a lower interest rate. ”
Markets like Kings County, New York and Orange County, California have average home values greater than 115% of the base credit limit and are privy to the higher compliant credit limits.
Alaska, Hawaii, Guam, and the US Virgin Islands have their own loan rules and will have a base limit of $ 970,800 on one-unit property for 2022.
> Related: Review compliant loan rates and requirements
FHA credit limits for 2022
The FHA, which aims to help borrowers with moderate incomes and creditworthiness, has also increased its credit limits for 2022.
Low cost areaMedium cost rangeHigh cost area1 unit$ 420,680 $ 420,681- $ 970,799 $ 970,8002 units$ 538,650 $ 538,651 $ 1,243,049 $ 1,243,0503 units$ 651,050 $ 651,051 $ 1,502,474 $ 1,502,4754 units$ 809,150 $ 809,151- $ 1,867,274 $ 1,867,275
In 2022, you can get an FHA-insured mortgage up to $ 420,680 on a one-unit property – or up to $ 970,800 in particularly expensive areas.
For a two-unit home, the standard FHA mortgage limit is $ 538,650; a three-unit house is $ 651,050; and $ 809,150 is the limit for a four-unit home.
As with compliant mortgages, the limits are location dependent and differ for low, medium, and high cost counties.
Alaska, Hawaii, Guam, and the US Virgin Islands also have their own boundaries due to increased construction costs. At these four locations, the baselines for 2022 are $ 1,456,200 for a unit; $ 1,864,575 for two units; $ 2,253,700 for three units; and $ 2,800,900 for four units.
> Related: Check out our FHA Loans Guide
There are no VA credit limits in 2022
In 2020, the U.S. Department of Veterans Affairs lifted the maximum amount of credit it would give to its borrowers. Eligible are veterans, active service members, National Guard members, reservists, and surviving spouses.
VA loans also offer the advantages of no down payment or mortgage insurance and the lowest interest rates on the market.
VA loans have a pre-financing fee that most borrowers add to their mortgage closing costs. These fees will carry over from 2021 to 2022 as follows:
depositFirst time useSubsequent usesNone2.3% of the loan3.6% of the loan5% or more 1.65% of the loan 1.65% of the loan10% or more1.4% of the loan 1.4% of the loan
> Related: Check out our guide to VA loans
Why were the credit limits increased in 2022 and is that a good thing?
The Housing and Economic Recovery Act – which was introduced in 2008 following the subprime mortgage crisis – requires that basic credit limits be adjusted every year based on the average US house price, according to the FHFA.
The FHFA's house price index soared 18.05% annually in the third quarter of 2021, increasing the compliant credit limit by the same amount.
This is a positive trend for consumers as the widening of credit limits offers a higher loan amount and, ultimately, more homes that they can potentially afford in the market.
"If credit limits were not allowed to increase each year to keep up with house prices, first-time and moderate-income home buyers would not have access to affordable mortgage capital, reducing home ownership opportunities for those who need it most," said until 2022, President of the California Association of Realtors, Otto Catrina.
See which loan types you qualify for and which offer you the best value here, along with the latest mortgage rates:
Confirm your new plan (December 4, 2021)