Credit limits increase in 2022
With the historic appreciation in house prices defining the past year, mortgage loan limits are increasing for 2022.
Qualified borrowers will be able to take out larger loans backed by government-sponsored companies – Fannie Mae and Freddie Mac – the Federal Housing Administration and the Department of Veterans Affairs.
To purchase a single-family home in 2022, you can borrow up to these limits in most areas of the United States:
- Conventional loan – $ 647,200
- FHA loan – $ 420,680
- VA loan – No loan limit
However, you may be able to borrow more if you live in an area with medium to high costs. In these areas, 2022 and FHA compliant loan limits are close to $ 1 million.
Confirm your actual loan limit using the link below.
Check your new loan limits for 2022. Start here. (December 3, 2021)
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Conventional loan limits for 2022
The Federal Housing Finance Agency (FHFA) announced compliant maximum loan limits for all mortgages acquired by Fannie Mae and Freddie Mac in 2022.
For reference, more than 60% Homebuyer loans are conventional mortgages, so these loan limits apply to most home buyers in the United States.
|Low cost zone||Mid-cost zone||High cost area|
|1 unit||$ 647,200||$ 647,201 to $ 970,799||$ 970,800|
|2 units||$ 828,700||$ 828,701 to $ 1,243,049||$ 1,243,050|
|3 units||$ 1,001,650||$ 1,001,651 to $ 1,502,474||$ 1,502,475|
|4 units||$ 1,244,850||$ 1,244,851 to $ 1,867,274||$ 1,867,275|
The maximum conventional loan limit for single unit properties in 2022 was $ 647,200 for most of the country. That’s a jump of $ 98,950 or about 18% from the $ 548,250 in 2021.
The loan limits on multi-unit residences have received similar increases. Two-unit homes reached $ 828,700; three units at $ 1,001,650; and four units at $ 1,244,850.
Although the limits vary by geography and have higher ceilings in mid and high cost areas.
“The conventional compliance limit will be the same everywhere, while the high balance differs from county to county,” said Jonathon Meyer, loan expert for The Mortgage Reports and MLO Chartered.
“In general, the conforming conventional tariffs will always have the best prices. For people who bought this year before the changes and had to get a high balance loan, they may consider contacting a lender to see if they can get a lower rate.
Markets like Kings County, New York and Orange County, California have median real estate values exceeding 115% of the benchmark loan limit and are aware of the highest compliant loan limits.
Alaska, Hawaii, Guam, and the U.S. Virgin Islands have their own set of lending rules and will have a base limit of $ 970,800 on single-unit properties for 2022.
> Related: Check compliance of rates and loan requirements
FHA loan limits for 2022
The FHA, aimed at helping borrowers with moderate incomes and credit scores, has also increased its loan limits for 2022.
|Low cost zone||Mid-cost zone||High cost area|
|1 unit||$ 420,680||$ 420,681 to $ 970,799||$ 970,800|
|2 units||$ 538,650||$ 538,651 to $ 1,243,049||$ 1,243,050|
|3 units||$ 651,050||$ 651,051 to $ 1,502,474||$ 1,502,475|
|4 units||$ 809,150||$ 809,151 – $ 1,867,274||$ 1,867,275|
In 2022, you can get an FHA insured mortgage of up to $ 420,680 for a single unit property – or up to $ 970,800 in particularly expensive areas.
For a two-unit home, the standard FHA mortgage limit is $ 538,650; for a three-unit house, it’s $ 651,050; and $ 809,150 is the limit for a four-unit house.
As with compliant mortgages, the limits depend on location, differing for low, medium, and high counties.
Alaska, Hawaii, Guam, and the U.S. Virgin Islands also have their own higher limits due to high construction costs. In these four locations, the 2022 baselines are $ 1,456,200 for unit units; $ 1,864,575 for the two units; $ 2,253,700 for the three units; and $ 2,800,900 for the four units.
> Related: Check out our FHA loan guide
VA loan limits don’t exist in 2022
In 2020, the US Department of Veterans Affairs removed the maximum loan amount it would give to its borrowers. Eligibility includes veterans, active duty members, National Guard members, reservists, and surviving spouses.
VA loans also offer the benefits of a no-obligation down payment or mortgage insurance and the lowest interest rates in the market.
VA loans have an upfront financing fee, which most borrowers will factor into the mortgage closing costs. These fees have been deferred from 2021 to 2022 as follows:
|Advance payment||First use||Subsequent uses|
|Nothing||2.3% of the loan||3.6% of the loan|
|5% or more||1.65% of the loan||1.65% of the loan|
|10% or more||1.4% of the loan||1.4% of the loan|
> Related: Check out our guide to VA loans
Why have the 2022 loan limits increased and is this a good thing?
The Housing and Economic Recovery Act – established in 2008 in the wake of the subprime mortgage crisis – requires base loan limits to be adjusted each year based on the average price of homes in the United States, according to the FHFA.
The FHFA house price index increased by 18.05% per annum in the third quarter of 2021, so the conforming loan limit increased by the same amount.
This is a positive development for consumers, as increasing loan limits offers a higher amount to borrow and ultimately more homes than they can potentially afford in the market.
“If loan limits were not allowed to increase each year to keep up with house prices, first-time and moderate-income homebuyers would not have access to affordable mortgage capital, reducing opportunities for mortgage capital. ‘Homeownership for those who need it most,’ according to 2022, president of the California Real Estate Association, Otto Catrina.
Find out what types of loans you qualify for and which offer you the best value for money, as well as the latest mortgage rates here:
Check your new rate (December 3, 2021)