Each year, the Federal Housing Finance Agency (FHFA) sets new limits for conforming loans in response to the current market conditions. As expected, home prices across the country are continuing to rise, so the limits for mortgages acquired by government-sponsored enterprises Freddie Mac and Fannie Mae have been determined accordingly. If you’re thinking about purchasing a home in 2022, here’s what you need to know about the latest conforming loan limits:
Establishing the new baseline
According to the Housing and Economic Recovery Act (HERA), the national baseline for conforming loan limits must be adjusted each year to account for changes in average U.S. home prices. The FHFA’s latest records demonstrate that the price of properties are continuing their upward trajectory–up by 18.05% between the third quarters of 2020 and 2021. Thus, the new conforming loan limits are rising by the same amount for 2022. In most counties, the baseline will be $647,200 (an increase of $98,950 from 2021).
What’s your county’s limit?
Although conforming limits are set at $647,200 for most areas, counties with high cost of living have higher thresholds. If you’re planning to purchase in Colorado, several counties have above-average baselines (often referred to as “high balance” loans).
Here are a few to be aware of, since you’ll need a down payment of at least 5%:
• Adams: $684,250
• Boulder: $747,500
• Broomfield: $684,250
• Denver: $684,250
• Douglas: $684,250
• Jefferson: $684,250
A note about down payments
If you’re planning to get a conventional loan in an area with the average conforming loan limit, here’s a look at how your down payment can affect the amount you can qualify for:
• 3% down: $667,000 purchase price
• 5% down: $681,000 purchase price
• 10% down: $720,000 purchase price
• 20% down: $809,000 purchase price
If you’re in the process of shopping for a home (or thinking about getting started), the new conforming loan limits set by the FHFA will work in your favor. There’s no question that buyers are noticing the rising prices of properties, so these updated baselines will help more homeowners-to-be achieve this goal.
By Michaela Phillips. Michaela is the Senior Lender for Synergy One Lending in Boulder. She enjoys teaching her clients the pros and cons of being a Real Estate Investor. Contact Michaela at 303.579.5517, e-mail [email protected] or visit michaelaphillips.com. NMLS: 312874.