Every year the Federal Housing Finance Agency (FHFA) announces their conforming loan limits for the upcoming year immediately following the November release of their House Price Index (HPI). FHFA uses this data on home price appreciation to set the new loan limits for the upcoming year. For areas in the country that are considered high cost, FHFA increases loan limits further and will go up to 150% of the baseline conforming loan limit.
In 2022, the new conforming loan limit for most of the US for one-unit properties will increase to $647,200, an increase of $98,950 from $548,250 in 2021. This means in areas of high-cost or with special statutory provisions, the loan limit can reach as high as $970,800. An example in Washington State would be the counties of King, Snohomish, and Pierce, where the loan limit will increase to $891,250, an increase of $115,000 from $776,250 in 2021.
This significant increase will help home buyers access more credit and remain competitive in the current market where home prices have quickly risen. In fact, this year-over-year increase of 18% in the conforming loan limit is the largest on record dating back to 1970.
If you have any questions or want to find out if you qualify for a conforming loan, please reach out today!
2022 Conforming Loan Limits By County
Home appreciation continues to reach historic highs as tight supply and strong demand lead to an extremely competitive housing market. According to the S&P CoreLogic Case-Shiller home price index, prices in February rose 12% year over year across the US. This 12% gain is a 15-year high, and Seattle is one of the top cities with a gain of 15.4% year over year.
Those trying to enter the housing market are feeling the frustrations and disappointments of a competitive low inventory market. In many cases, buyers are having to make over five offers on homes before getting one accepted. However, the risk and rewards can quickly make sense when you consider the yearly equity gains with appreciation being higher than most full-time annual salaries. With a 15.4% gain in home prices year over year in Seattle, a person purchasing a $750,000 home last year would have gained $115,500 in appreciation on average. Historically low interest rates are also helping give a small boost to your purchasing power, so long as they remain low.
In the end, the most important thing prospective homebuyers need to consider is if are you in a position to responsibly take on a mortgage payment. Make sure you are evaluating a range of factors including your finances, personal life, and future. Connect with us today if you have any questions. If you have anyone looking to get pre-approved to purchase a home or refinance, we’d love the opportunity to serve them!