Higher home loan limits make it easier to build

Is this the year you’ll build a new home?

Although some supply chain issues remain in the home construction market, there’s good news on the mortgage front. The Federal Housing Finance Agency (FHFA) and Federal Housing Authority (FHA) have just announced their new maximum loan limits for 2022.

With reduced access to critical construction materials and a dearth in the workforce, the price of building a home has been creeping up. Fortunately, the maximum borrowing amount for certain FHFA and HFA-insured mortgages will increase by almost $100,000 this year.

Baseline Conforming Loan Limits for 2022

The Federal Housing Finance Agency (FHFA) announced the baseline Conforming Loan Limits (CLLs) for mortgages to be acquired by Fannie Mae and Freddie Mac during 2022, which are based on the year-over-year (YOY) average housing price increase during the previous four quarters.1 Last year’s robust housing market reflected an 18.05% YOY average increase, which translates to an increase of $98,950 for the 2022 baseline CLL.

Therefore, in most of the United States, the 2022 CLL for single-family homes is now $647,200, which means that qualified homebuyers can borrow up to this amount for conforming mortgages.2

Since housing prices vary across the nation, the CLL for higher-priced areas is based on 150% of the standard amount of $647,200, bringing that ceiling price to $970,800. This higher CLL is also applicable for Alaska, Hawaii, Guam, and the U.S. Virgin Islands due to statutory provisions. You can view county-specific 2022 CLLs this map or read FAQs here.

FHA National Loan Limits for 2022

The Federal Housing Administration (FHA) also announced new loan limits for calendar year 2022, which are tied to the FHFA’s increase in the 2022 CLLs as described above.3

“The increase in loan limits, commensurate with the increase in home prices, will allow qualified individuals and families to continue to access FHA-insured mortgages to achieve affordable home financing,” Principal Deputy Assistant Secretary for Housing and FHA, Lopa Kolluri, said.

Due to robust increases in median housing prices and required changes to FHA’s “floor” and “ceiling” lending caps, the maximum loan limits for FHA forward mortgages will rise in 3,188 counties, while the loan limits will remain unchanged in 45 counties.

The National Loan Limit floor for 2022 is $420,680 and is the highest amount you can borrow for an FHA-insured single-family mortgage in most areas of the U.S. This loan amount represents 65% of the recently announced FHFA Conforming Loan Limit (see above) and is available to borrowers in areas in which 115% of the median home price is less than the floor.

Any area where the loan limit exceeds this floor is considered a high-cost area. The maximum loan limit ceiling for high-cost areas is $970,800, which 150% of the 2022 CLL.

Alaska, Hawaii, Guam, and the U.S. Virgin Islands are considered to be “special exception” areas that have a higher FHA loan limit ceiling of $1,456,200 for a one-unit property. The higher loan limit reflects the greater cost of construction in these places.

You can find FHA loan cap amounts that are in between the floor and ceiling in this chart or search your county’s limits here.

Reach out to us with any questions you have about the FHFA loans or FHA-insured loan limits for 2022. As always, we’re here to help you.

  1. The Housing and Economic Recovery Act (HERA) requires that the baseline CLL for the Enterprises be adjusted each year to reflect the change in the average U.S. home price. The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 11 Federal Home Loan Banks. These government-sponsored enterprises provide more than $7.3 trillion in funding for the U.S. mortgage markets and financial institutions. Additional information is available at www.FHFA.gov, on Twitter, @FHFA, YouTube, Facebook, and LinkedIn.
  2. The CLL will not increase for four U.S. counties or county equivalents that did not experience rising home prices.
  3. FHA is required by the National Housing Act (NHA), as amended by the Housing and Economic Recovery Act of 2008 (HERA), to set Single Family forward mortgage loan limits at 115 percent of area median house prices, subject to a floor and a ceiling on the limits. In accordance with the NHA, FHA calculates forward mortgage limits by Metropolitan Statistical Area (MSA) and county. https://www.hud.gov/press/press_releases_media_advisories/hud_no_21_197, https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-28mlhsg.pdf

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