These entities set the maximum loan amount that can be insured by the federal government. The conforming loan limit will increase in 2022, enabling higher loan amounts when purchasing a home.
In general, conforming loans are advantageous to borrowers because they provide access to more affordable mortgage financing. The federal government sets limits on how much it will guarantee loans for purchase or refinance of a home. Borrowers with higher credit scores may qualify for a lower interest rate on a conforming loan. Additionally, these types of loans offer competitive rates, which are often lower than non-conforming loans because of less risk for the lender.
2022 will see an increase in the conforming loan limits in many areas of the country. The change is based on median price within the county and could potentially provide borrowers a larger loan amount. In some high-cost areas, conforming loan amounts may increase up to 20%. This increase could enable individuals to borrow more money and qualify for mortgages beyond their original limits.
The current conforming limit for most counties is $548,250. For high-cost areas, the conforming limit is higher. In 2022, the new conforming loan limit for most counties in the U.S. will be $548,250, and the high-cost areas will now have a limit of $822,375.
Due to the increasing cost of real estate prices, particularly in high cost areas, lenders are expecting a higher volume of applications for conforming loans next year. Banks have already announced they are preparing for the increased demand.
It’s important to note that the increasing conforming loan limit does not mean the elimination of non-conforming loans. Non-conforming loans are still available and may still be desirable to some borrowers depending on their qualifications.
In summary, conforming loan limits will increase in 2022, bringing access to more affordable mortgage financing to many borrowers. The conforming loan limit will increase to $548,250 for most counties and up to $822,375 for high-cost areas. As a result, lenders are preparing for an increased demand for conforming loans and borrowers should consider them for their home loan needs. Despite the increasing limit, non-conforming loan options are still available to those who may not qualify for a conforming loan.
This article was contributed on Dec 03, 2023
