Federal Agency Announces 2022 Conforming Limits for Conventional Loans

The agency based the increase on staggering increase in housing prices in 2021.

On Tuesday, the Federal Housing Finance Agency (FHFA) announced its 2022 conforming limits for conventional loans to be acquired by Fannie Mae and Freddie Mac. The limit is adjusted each year to reflect the change in housing prices across the country, which means a significant increase from the 2021 figure.

  • The FHFA recently announced the loan limit for conforming conventional loans.
  • Conforming loans are loans that meet the guidelines to be purchased by government-sponsored enterprises Fannie Mae and Freddie Mac.
  • Conforming loan limits are uniform for most states but higher in high-cost areas.

Conforming Loan Limit to Increase by 18% to Match Home Price Increase

Each year, the FHFA adjusts the limit for conforming mortgage loans, as required by the Housing and Economic Recovery Act, to account for changes in the average home price in the U.S.

In 2021, Americans experienced a searing-hot housing market. According to the National Association of Realtors, the median sales price increased in 99% of housing markets across the country during the third quarter, and 78% experienced double-digit growth from the previous year.

Based on the nominal seasonally-adjusted, expanded-data FHFA House Price Index, house prices increased by an average of 18.05% in the third quarter, which resulted in the same increase to the conforming limit for conventional loans, from $548,250 to $647,200. In contrast, the increase from 2020 to 2021 was only 7.4%.

If you live in a high-cost area or certain states and territories, the conforming limit is 150% of the baseline ceiling. In 2022, that limit will be $970,800. This ceiling applies to residents of Alaska, Hawaii, Guam and the U.S. Virgin Islands, as well as areas in which 115% of the local median home value exceeds the baseline conforming loan limit.

A conventional loan is any mortgage loan that's not backed by a government agency. But under the conventional umbrella, conforming loans are the only loans that meet the requirements to be acquired by Fannie Mae and Freddie Mac. Jumbo loans, which exceed the conforming limit, are the most common type of nonconforming loan. If your loan amount qualifies to be a jumbo loan, you may face stricter underwriting criteria, such as higher credit score and down payment requirements.

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  1. National Association of Realtors. "Home Prices Spiked by Double-Digits in 78% of Metro Areas in Third Quarter of 2021."

  2. Federal Housing Finance Agency. "FHFA Announces Conforming Loan Limits for 2022." Dec. 1, 2021.

  3. Federal Housing Finance Agency. "FHFA Announces Conforming Loan Limits for 2021."

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