Housing prices have skyrocketed in many areas over the last few years. This has resulted in many home loan applicants needing to apply for a jumbo loan rather than a conforming loan. Keep in mind that conforming loans generally have a better rate because they are backed by Freddie Mac and Fannie Mae. Now, the loan limits for conforming home loans are poised to increase, and this sets the stage for better financing options for some home loan applicants. Even though the official announcement has not been released, some mortgage lenders are already entertaining higher loan amounts for conforming mortgages.

Interest rates have slowly marched upward. As a result, financing across jumbo and conforming loan programs alike has gotten more expensive. With conforming loan limits increasing, more applicants will be able to qualify for better rates on conforming loans. In addition to being more affordable, conforming loans may have more lenient requirements. Applicants who may have not been able to get approved for a jumbo loan may now be able to apply for a conforming loan.

While there is no official word yet on what the new conforming loan limits will be, you can reasonably expect the increase to be substantial. For 2021 the conforming loan limit is $548,250. Some are projecting the limit for 2022 to be $625,000. This represents a 14 percent increase, and it is a direct reflection of how significantly housing prices have increased over the last year. Keep in mind that some markets, such as Alaska and Hawaii, usually have higher loan limits than the rest of the country has. Properties with two to four units may also qualify for higher loan amounts.

Our team at MortgageDepot can answer your questions about conforming loans and jumbo loans. To learn more or to get prequalified for the financing you need, contact our MortgageDepot lending team today.

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