The Federal Housing Finance Agency (FHFA) has announced the conforming loan limits (CLLs) for mortgages to be acquired by the government-sponsored enterprises (GSEs) in 2022, as in most regions of the nation, the 2022 CLL for one-unit properties will be $647,200, an increase of $98,950 from $548,250 in 2021.
The Housing and Economic Recovery Act (HERA) requires that the baseline CLL for the GSEs be adjusted annually to reflect the change in the average U.S. home price.
The FHFA’s Q3 2021 FHFA House Price Index (FHFA HPI) Report has found that house prices increased 18.05%, on average, between Q3 of 2020 and 2021, thus forcing the baseline CLL in 2022 to increase by the same percentage.
"Earlier today, FHFA announced the Conforming Loan Limits for 2022. Compared to previous years, the 2022 Conforming Loan Limits represent a significant increase due to the historic house price appreciation over the last year,” said FHFA Acting Director Sandra L. Thompson. “While 95% of U.S. counties will be subject to the new baseline limit of $647,200, approximately 100 counties will have conforming loan limits approaching $1 million. FHFA is actively evaluating the relationship between house price growth and conforming loan limits, particularly as they relate to creating affordable and sustainable homeownership opportunities across all communities.”
For areas where 115% of the local median home value exceeds the baseline conforming loan limit, the applicable loan limit will be higher than the baseline loan limit. HERA establishes the high-cost area limit in those areas as a multiple of the area median home value, while setting a "ceiling" at 150% of the baseline limit. Median home values generally increased in high-cost areas in 2021, which increased their CLL. The new ceiling loan limit for one-unit properties will be $970,800, which is 150% of $647,200.
Special statutory provisions establish different loan limits for the regions of Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the baseline loan limit will be $970,800 for a one-unit property.
The rise in the nation’s home values forced the CLLs to be higher in all but four U.S. counties or county equivalents.