The Federal Housing Finance Agency (FHFA) today announced the baseline conforming loan limit for 2022 will be $647,200, an increase of 18%.
The federal government will now back mortgage loans of nearly $1 million, with the new ceiling loan limit for one-unit properties in most high-cost areas now $970,800 — or 150% of $647,200.
Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $970,800 for one-unit properties.
In 2021, the FHFA set the baseline conforming loan limit at $548,250, a 7.5% increase from the prior year. Over the past six years, the baseline loan limit has risen $230,200.
Median home values exploded across dozens of housing markets across the country in 2021. In the third quarter, the FHFA announced that its house price index saw the largest increase since the metric was introduced in 2008. House prices increased 18.5% across the nation, while some markets saw even larger increases.
A 2008 law determines the conforming loan limits for Fannie Mae and Freddie Mac. The Housing and Economic Recovery Act established a formula for increases, and set the baseline loan limit at $417,000. It mandated that the baseline could only rise after home prices returned to pre-recession levels. That condition was finally met in 2016, when the FHFA increased conforming limits for the first time in a decade.
For high-cost areas, where 115% of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit is higher than the baseline loan limit. HERA establishes the maximum loan limit in those areas as 150% of the baseline loan limit.
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