Things Happening in the Mortgage World
FannieMae and FreddieMac have decided to raise the Conforming loan limits for 2022. What does that mean? Currently in most areas of the United States,except areas where the limit is higher, the previous maximum loan limit was $548,250. If you financed more than that amount, the loan became a JUMBO loan, with stricter lending guidelines. These loans also require more reserves in your asset accounts, potentially a higher interest rate and is limited on debt-to-income ratio allowances, as opposed to a Conventional Conforming loan. With the recent increase in house prices, the institutions mentioned earlier decided to raise that loan limit to $625,000, not requiring many to have to use JUMBO financing. There is a rumor that it may even increase to $650,000 sometime next year. This is great news!
This loan limit increase will allow a lot of consumers to be able to take advantage of a low down payment, lower interest rate and conventional loan financing options. For instance, someone could buy a home for $600,000 and put 5% down and finance $570,000 on a Conventional loan and not need to use a JUMBO loan, as the $570,000 is within the range of the new $625,000 loan limit. VA financing will most likely follow suit and use the Conventional loan limit as its target VA loan limit as well. Nothing has been released yet regarding loan limits for the other products like FHA or USDA, but they are on the way.
Robert Groves, Senior Mortgage Broker
5635 N.E. Elam Young Parkway, Suite 308
Hillsboro, OR 97124