In response to rising home prices across the US, Fannie Mae and Freddie Mac will support mortgages up to $1 million beginning January 1st, reports MarketWatch. Conforming loan limits for 2022 will increase to a baseline of $647,200, up nearly $100,000 from 2021, and they will benefit homebuyers in most of the country. The legal limit for high-cost areas is 150% of the total baseline limit, meaning that Fannie Mae and Freddie Mac could back loans with a value of up to $970,800.
Fannie Mae and Freddie Mac will soon provide guarantees for mortgages close to $1 million, owing to the past year’s titanic increase in home prices.
On Tuesday, the Federal Housing Finance Agency released its breakdown of the conforming loan limits for 2022. These are the maximum allowable mortgages that can be backed by Fannie Mae FNMA, +25.89% and Freddie Mac FMCC, +25.28% — larger home loans would be considered jumbo loans, which are typically portfolio loans or securitized privately.
Throughout most of the country, the 2022 baseline limit on loans for single-family homes backed by Fannie and Freddie will be $647,200, which represents an increase of nearly $100,000 from 2021. The new limits officially go into effect on Jan. 1.
The FHFA based the increase on data gleaned from its House Price Index, which showed an 18.05% increase on average in home prices nationwide between the third quarters of 2020 and 2021.