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What is the Conventional Loan Limit for 2022?

EMS Blog Banner 1 December 2021 What is the conventional loan limit 2022
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Conventional Loan Limit for 2022


A loan limit refers to the maximum mortgage amount a homebuyer can borrow. Each year, the Federal Housing Finance Agency (FHFA) sets a new limit to which lenders adhere.


Although FHFA usually announces the loan limit for the next year in November, some lenders are already honoring the new limit as early as October. Read on to learn more about the new conventional loan limit for 2022 and what this recent change means for homebuyers.


What is a Conventional Loan?


A conventional home loan is a type of mortgage not guaranteed by the government. Instead, it is offered by private companies such as Fannie Mae and Freddie Mac. Conventional loans are often divided into two types: conforming and non-conforming.


Conforming loans are mortgages that follow the loan limit set by the FHFA. This is the regular loan that most homebuyers are familiar with. First-time homebuyers can make a 3% down payment. Second-time homebuyers would need a minimum of 5% down. But if you want to skip paying the premium mortgage insurance, you'll have to make a 20% down payment. Additionally, you'll need a credit score of at least 620 and a debt-to-income (DTI) ratio of 50%.


On the other hand, if the borrower needs a home loan that exceeds this limit, they would have to opt for a non-conforming mortgage, also called the jumbo loan. Jumbo loans don't follow the FHFA standards. They can also be tougher to qualify for. Some of the requirements for a jumbo loan include a minimum down payment of 10% and a credit score of at least 700.

Conforming Conventional Loan Limit for 2022


Every year, the FHFA updates the conventional loan limit depending on the market value of properties. Usually, the FHFA announces the changes in November. But early in October, Fannie Mae and Freddie Mac went ahead and increased the conforming loan limit for 2022 to $625,000. This is a $76,750 increase from the current year's limit, which is $548,250. This also means that you can immediately apply for a conventional loan with this higher limit, as most lenders are honoring them now.


What Does The New Conventional Loan Limit Mean for Homebuyers?


The increase in the conforming loan limit could be advantageous for some and disadvantageous for others. The advantage is that homebuyers are now able to afford more expensive houses with a conventional loan. For example, with a 3% down, you'll be able to buy a home with a maximum purchase price of $644,329. In other words, you'll be able to afford a home that is $80,000 more expensive than the 2021 maximum purchase price.


The increase would also allow you to make a higher offer. This means that with a conventional loan, you'll have a higher chance of being chosen by the seller over homebuyers with a different mortgage type.


However, since conventional loans have less strict requirements, many people will have access to the new loan limit. Therefore, this could be disadvantageous for some homebuyers because the marketplace could be more competitive than ever before.




The 2022 conforming loan limit increased to $625,000. This would allow you to afford houses that are $80,000 more expensive than this year's maximum purchase price. But keep in mind that you would still have to qualify with the conventional loan requirements to take advantage of it. And if you exceed the new loan limit, even by just $1, you would have to get a jumbo loan which can be harder to qualify for.


Conventional Loan Mortgage Brokers


If you want to take advantage of the conventional loan limits in Florida this 2022, the mortgage broker at Ebenezer Mortgage Solutions would be more than happy to help you. Call us today at (813) 284 - 4027, so we can start working on your mortgage application.


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