Conforming Loan Limits, Home Price Appreciation Rise to Record Highs

The conforming loan limit rose to $647,200 at the start of 2022, an 18% one-year increase set by the Federal Housing Finance Agency to keep pace with rising home values that grew 19.6% in 2021, according to Zillow. The 2022 increase marks the largest change on record, and in 159 medium- and high-cost U.S. counties accounting for 20% of the national population, the conforming loan limit is even higher.

Rapid home value appreciation is causing a monthly reduction in the number of homes that qualify for a conforming loan, while nonconforming jumbo loans are rising ahead of a competitive spring home shopping season.

Because conforming loan limits are only increased once per year, in January, buyers shopping for more-expensive homes should consider the time of year they are looking to buy – especially if they are worried about qualifying for stricter jumbo loan mortgages. For example, a buyer seeking a $700,000 home in December 2021 would have needed to put down at least 21.7% to get their loan amount under the typical 2021 loan limit and avoid a jumbo loan. But in January 2022, the down payment necessary to obtain a standard mortgage for less than the conforming loan limit was only 7.5%, owing to the big jump between 2021 and 2022 baseline limits.

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