Per Fannie Mae and Freddie Mac, Wyndham Capital Mortgage is announcing that Fannie Mae and Freddie Mack are increasing conforming loan limits beginning January 1, 2022.
News of the increase follows the official public notice made by Fannie Mae and Freddie Mac revealing the raise of the current baseline – $548,250 for single-family homes – by more than $75,000.
The new limit will consider conforming loans up to $625,000 in most areas for borrowers in 2022 and marks the official biggest dollar increase in loan limits since the 1970s.
What are conforming loan limits?
Just as homebuyers are limited as far as how much they can borrow from a lender, lenders are also limited by the Federal Housing Finance Agency (FHFA) in regards to how much they can lend out to their borrowers.
Thus, the FHFA sets a limit as far as what loans they consider to be “conforming.” Once the conforming loan limits are set, lenders must abide by these standards set by the FHFA.
Most lenders offer “conforming” or “conventional” loans as they serve to benefit many different types of borrowers and have several benefits.
Why the increase?
Each year, the FHFA sets a dollar amount on what they will consider to be a standard “conforming loan.” That dollar amount is tied to current home prices as well as increases in home values over the previous year and is updated based on the House Price Index (HPI).
As a result of the surge in home prices during the pandemic and increasingly competitive housing market in 2021, lenders predict home prices will continue to increase over the next year and that they will soon be able to sell bigger loans to federally backed Fannie Mae/Freddie Mac once limits increase.
What could this mean for borrowers?
An increase in conforming loan limits will enable more homebuyers purchasing homes with a higher sale price to enjoy the benefits of a conforming mortgage loan without needing a jumbo loan.
While jumbo loans can be adapted to meet your financing needs, they often require stricter qualifying information, such as higher credit scores, higher interest rates and are beyond traditional funding limits as they aren’t currently backed by Fannie and Freddie.
Potential benefits of qualifying for traditional, conventional loan programs include access to financing at lower rates, lower down payments and lower credit score requirements.
Why apply with WCM?
At Wyndham Capital Mortgage, we’re tuned in to the needs of our borrowers during this time and welcome the increase in loan limits as an opportunity to better serve our homebuyers while rates are still at historic lows.
With more than 20 years of tenure, we understand that when it comes to purchasing a home, you’re making one of the biggest purchases of your life and you deserve a transparent, trustworthy and unique mortgage experience that could save you both time and money.
At WCM, we’re built and equipped to take on different experiences and different mortgages, so customers can be certain they will get the top-notch customer service they deserve.
If you have any questions regarding the new conforming loan limits, our current loan programs, what you may qualify for, or if you want to speak with one of our mortgage professionals, contact us today.