FHFA Increases Conforming Loan Limit To $647,200

The Federal Housing Finance Agency (FHFA) Increases Conforming Loan Limit To $647,200  And High-Balance Ceiling To $970,800 for 2021

As expected, the FHFA Increases Conforming Loan Limit To $657,200 for 2022 from $548,250. The increase in conforming loan limits for 2022 is the sixth increase the Federal Housing Finance Agency has increased the loan limit on conventional loans. The FHFA is the first agency that increases the loan limit. HUD, the parent of FHA, follows the FHFA’s lead. The housing market has been booming for the past several years with no slight sign of a housing correction.

The Housing Market Bullish Despite The Coronavirus Outbreak And Scare

When the coronavirus outbreak hit the nation this past February 2020, many economists and real estate experts forecasted a housing meltdown worse than the 2008 housing and mortgage crisis. Over 50 million Americans filed for unemployment due to the country being shut down due to the coronavirus pandemic. Unemployment rates reached close to 20%. Many experts and economists predicted unemployment rates will surpass the 35% mark and the U.S. economy will enter a worse recession than the 2008 financial crisis. The Trump Administration’s quick economic stimulus package and President Trump’s being proactive in handling the economy stumped further economic corrosion from the COVID-19 doing more damage. Despite the gloomy forecast of economists, the housing market went the opposite direction. Instead of the housing market plummeting, housing prices started skyrocketing. Many pre-approved homebuyers put their plans on buying a home on hold hoping for a correction.

In this article, we will discuss and cover the hot housing market and fast coronavirus recovery and how it will affect home prices going into 2021.

FHFA Increases 2022 Conforming Loan Limit Due To Rising Home Prices

FHFA Increases 2021 Conforming Loan Limit Due To Rising Home Prices

Skyrocketing home prices due to more demand for homes versus housing inventory have many homebuyers being priced out of the market. The FHFA’s 2021 conforming loan limit increase to $647,200 was almost a $100,000 increase from 2021’s $548,250.  The announcement of the FHFA’s increase of the conforming loan limit for 2022 to $647,250 was the fifth increase in the past five years from the Federal Housing Finance Agency.

The FHFA Increases Loan Limit On Conventional Loans Due To Skyrocketing Home Prices

The Federal Housing Finance Agency (FHFA) announced new conforming loan limits for Fannie Mae and Freddie Mac for 2022. As expected, the FHFA has increased the 2022 conforming loan limit to $647,200. This is a $100,000 increase from 2021’s limit of $548,250. This $100,000 increase in the conforming loan limit is the sixth consecutive year of increases from the FHFA. This is historic for the FHFA to be increasing the conforming loan limits for five years in a row. Conforming loan limits remained the same for over 10 years until 2016. In 2016, the Federal Housing Finance Agency increased the conforming loan limit for the first time in 10 years. Since 2016, the conforming loan limit has increased by $131,250.

Booming Housing Market With No Correction In Sight

Many economists and housing experts are very concerned with the rapidly rising home prices. Due to the skyrocketing home prices nationwide, other government agencies have lowered the loan to value on cash-out refinances this year. HUD, the parent of FHA, has lowered the loan to value from 85% to 80% LTV on cash-out refinance FHA loans. The Veterans Administration has lowered the loan to value on cash-out refinance VA loans from 100% to 90% loan to value.

Concerns Of Skyrocketing Home Prices

Government mortgage insurance experts are afraid of the out-of-control skyrocketing home prices. This is the reason they are concerned about another housing boom and a potential housing market crash. With the Central Bank lowering the interest rate to zero percent, mortgage rates have plummeted to historic lows which fueled the already strong booming housing market. Today’s 30-year fixed-rate mortgages are under 3.0%. Mortgage rates are expected to remain low for the next couple of years. Demand for homes remains stronger than ever. Demand far outpace the inventory of homes in the market.

FHFA Increases Conforming Loan Limit To $647,200 For 2022 Due To Rising Home Prices

The Federal Housing Finance Agency (FHFA) has increased conforming loan limits for five years in a row. If the FHFA did not increase conforming loan limits, many homebuyers would be priced out of the market due to skyrocketing home prices. Home prices have hit a seven-year high recently. The increase of the conforming loan limit will no doubt help homebuyers who were priced out of the market due to the home values substantially higher than the maximum loan limit caps on conventional loans. High-balance conforming loan limits in high-cost counties have increased from the current $765,500 to $970,800 for 2022 on single-family homes. Two to four-unit multi-family homes have higher conforming loan limits than single-family homes.

Click here for a list of the maximum conforming loan limits for all counties in the United States

Summary And Recap

To summarize, the base loan limit on conventional loans will increase to $647,200 or 2022 from $548,250 on single-family homes for 2022. In high-cost counties, the high balance ceiling will increase to $870,800 from $822,375 on single-family homes.

Note: The new conforming loan limits for 2022 on conventional loans are effective immediately for many lenders. HUD has increased FHA loan limits to $420,680 on single-family homes. There are no maximum loan limits on FHA loans. Capital Lending Network, Inc. will announce the breaking news on any news pertaining to the mortgage industry. Th increase of loan limits on FHA loans for 2022 is the sixth increase in a row.


Gustan Cho is a senior mortgage expert and National Managing Director, providing direct-to-consumer advice at NEXA Mortgage LLC. We are a mortgage brokers licensed in multiple states. We are experts in FHA Loans, VA Loans, USDA Loans, Conventional Loans, FHA 203k Loans, Reverse Mortgages Jumbo Mortgages, Non-QM mortgages, Bank Statement Mortgage Loans for self employed borrowers, and alternative financing.

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