The limit is adjusted each year to reflect changes in housing prices across the country. In most of the U.S., the 2022 CLL for one-unit properties will be $647,200, a $98,950 increase from $548,250 in 2021, according to a press release.
As house prices increased an average of 18% between the third quarters of 2020 and 2021, the baseline CLL in 2022 will increase by the same percentage, according to the 2021 FHFA House Price Index report.
However, the loan limit will be higher in areas where 115% of the local median home value exceeds the baseline limit. The Housing and Economic Recovery Act (HERA) establishes that limit, with a “ceiling” of 150% of the baseline limit. The report noted that the new ceiling loan limit for one-unit properties in Alaska, Hawaii, Guam and the U.S. Virgin Islands would be $970,800, 150% of $647,200.
Due to rising home values, the CLLs will be higher in all but four U.S. counties or county-equivalents.
“Compared to previous years, the 2022 conforming loan limits represent a significant increase due to the historical house price appreciation over the last year,” said Sandra L. Thompson, acting director of FHFA, in a statement. “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.”
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Changes for Fannie and Freddie Mac
If there’s one thing that the pandemic did, it loaded up Fannie and Freddie with super clean credit-tight loans. This has made a massive swing in the MCAI. What’s that now? Not sure what we’re talking about? Then tune in and find out.
The Obama administration today released its long-awaited proposal for overhauling the mortgage market, calling for gradually shutting down bailed-out Fannie Mae and Freddie Mac and reducing the government’s now huge role in housing finance.
The 32-page plan calls for phasing in an increase in the down payment requirement for loans guaranteed by Fannie and Freddie to 10%, while reducing the maximum size of mortgages they can back — a move that would affect Boston and other high-cost areas.
During the financial crisis, Congress boosted the limit on such loans to as much as $729,750. The administration said it supports letting the limit drop back to $625,500 as scheduled on Oct. 1.