FHFA: 2022 Loan Limits 18.05% Higher – to $647,000

By Kerry Smith

The cap on conventional and FHA loans will rise notably higher next year, with caps in a handful of high-cost markets coming close to $1 million.

WASHINGTON – The Federal Housing Finance Agency (FHFA) announced new 2022 conforming loan limits – the amount Fannie Mae and Freddie Mac can acquire rose by a hefty 18.05%.

The actual cap varies by region, but for most of the U.S., the 2022 limit for one-unit properties will be $647,200 – an increase of $98,950 from $548,250 in 2021.

The new $647,200 conforming loan cap applies to all Florida counties but one: In Monroe County, which includes the Florida Keys, the cap will be $710,700. FHFA published a map on its website that shows 2022 loan caps by U.S. county. It also offers a downloadable
list of 2022 conforming loan limits in an Excel spreadsheet.

Yearly cap increases are written into law. The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit adjustment must be based on changes in the average U.S. home price. In a year of rapidly rising home prices, a notable increase for 2022 was generally expected. According to FHFA, house prices increased 18.05%, on average, between the third quarters of 2020 and 2021. As a result, the baseline cap will rise by that amount in 2022.

“With the continuous rising of home prices, the National Association of Realtors® appreciates the FHFA resetting the national and high-cost conforming loan limits,” says NAR President Rouda Smith in a statement. “The FHFA’s actions will continue to ensure liquidity for home purchase market.”

Most lenders sell some or all of their new mortgages to Fannie Mae or Freddie Mac. Doing so provides them with fresh capital to make even more home loans. As a result, independent lenders generally adhere to FHFA’s mortgage guidelines.

FHA 2022 loan limits

The caps for Federal Housing Administration (FHA) loans largely mirror those announced by FHFA, though the two agencies work separately. The new loan limits are effective for FHA case numbers assigned on or after Jan. 1, 2022.

Under existing laws, FHA must set single-family forward mortgage loan limits at 115% of area median house prices, subject to a floor and a ceiling on the limits. It calculates limits by Metropolitan Statistical Area (MSA) and county.

For FHA, the national conforming loan limit for 2022 is also $647,200. FHA’s 2022 minimum national loan limit “floor,” $420,680, is set at 65% of the national conforming loan limit. The “floor” applies to areas where 115% of the median home price is less than the “floor” limit. Any area where the loan limit exceeds this “floor” is considered a high-cost area, and the NHA requires FHA to set its maximum loan limit “ceiling” for high-cost areas at $970,800, or 50% of the national conforming loan limit.

The maximum loan limit for FHA mortgages will rise in 3,188 U.S. counties, but will remain unchanged in 45 counties.

To find a complete list of FHA loan limits by area, go to FHA’s “Mortgage Limits” webpage.

Rates for Home Equity Conversion Mortgages (HECMs) will also change in 2022. For more information on FHA and HECM updates, refer to FHA’s latest mortgagee letter.