In this blog, we will cover and discuss FHFA increase conforming loan limits in California on both median-priced areas and high-cost areas. The FHFA also increased high-balance conforming loan limits in California for 2022 to $970,800 in high-cost areas.  Conventional Loans are the most popular loan program in the United States. Housing prices have been skyrocketing in all areas of the U.S. despite mortgage rates being at the highest level since 2008.

Many home buyers who qualified for conventional loans could not purchase homes since the maximum conforming loan limits were capped at $647,200. California has the highest home prices in the nation. There is no other state in the nation than California that has high-cost counties. In this article, we will cover and discuss high-balance conforming loan limits in California for 2022.

Federal Housing Finance Agency And Conforming Loans

The Federal Housing Finance Agency (FHFA) is the regulatory agency that regulates Fannie Mae and Freddie Mac and sets conforming loan limits on conventional loans. FHFA increased conforming and high balance loan limits for 2022 from $647,200  effective January 2022. High-balance conforming loan limits were increased to $970,800 in high-cost counties on single-family homes. Conventional borrowers can close on their conventional loans in median-priced areas with a maximum loan cap of $647,200.

FHFA Increases Conforming And High Balance Loan Limits Nationwide

The Federal Housing Finance Agency announced today that conventional loan limits purchased by mortgage giants Fannie Mae and Freddie Mac will be increasing from $647,800 nationwide. FHFA Increases Conforming And High Balance Loan Limits is the sixth conforming loan limit increase in 6 years.

FHFA Increase Conforming Loan Limits For The Past Six Years Due To Rising Home Prices

Every year for the past six years, FHFA has been increasing conforming loan limits due to increasing home values. The FHFA Conforming Loan Increase marks the sixth time it has increased loan limits since 2006. The high balance conforming loan limit has been increased to $970,800 for single-family homes. This means a 150% over the traditional conforming loan limit of $647,200.

FHFA Increase Conforming Loan Limits And High Balance Loan Limits Due To Spike In Home Prices

The loan limit for owner-occupant single-family properties will now be capped at $647,200 in median-priced areas and increased to $970,800 in high-cost areas of California. Home prices had an average increase of 14.0% in the past 12 months. 47 counties in the United States are classified as high balance loan limits. VA Loans normally follow Conventional Lending Guidelines. VA Loans will follow Conforming Loan Limits. This also includes VA High Balance Loans.

Take Advantage Of Higher Conforming Loan Limits Today And Not Wait Until New Year

Don’t wait for the New Year to qualify for conforming loans. Start the mortgage process tomorrow, November 28th, and close before the holidays. Even though the FHFA announced the conforming loan limits will be increasing starting January 1, 2022, FHA Lend Mortgage is letting you submit and close your high balance loans now, no need to wait. The increase in conforming loan limits is great news. HUD, the parent of FHA, normally follows loan limit increases by FHFA. We will see what HUD loan limit increases will be in the coming days. To qualify contact us at Capital Lending Network at 888-900-1020 or text us for a faster response. Or email us at contact@capitallendingnetwork.com. Our licensed and support personnel team is available 7 days a week, on evenings, weekends, and holidays.

Government and Conforming Loan Limit Increase Due To Rising Home Prices

In the following paragraphs, we will discuss and cover the mortgage loan limits on government and conforming loans. There are maximum mortgage loan limits and minimum mortgage loan limits depending on the loan program borrowers choose. For a lender, the same amount of work goes in to processing and underwriting a $50,000 mortgage loan as it is to process and underwrite a $700,000 home loan.

How Loan Size of Borrowers Benefit Mortgage Lenders

Lenders get paid based on a percentage of the loan size. Most lenders will try to deter from processing and underwriting a smaller loan amount. A $50,000 loan application takes the same amount of work as a $400,000 mortgage loan application. But a mortgage lender will only make $500 dollars on a $50,000 mortgage loan compared to $4,000 on a $400,000 mortgage. The only difference between a $50,000 loan and a $400,000 loan is just the inputting of the numbers. In this article, we will discuss and cover Mortgage Loan Limits On Government And Conforming Loans.

Minimum Mortgage Loan Amount

The minimum mortgage loan amount varies from one lender to another. Legally, a lender cannot refuse to take a mortgage application on a smaller size home loan. Most lenders will not want to touch any mortgage loan size under $100,000. Other lenders will go down as low as $50,000 loan amount. Most lenders do not like mortgage loan amounts under $100,000. This is because whether it is a $100,000 or one million loan, the same work is required. Lenders are not profitable when processing and underwriting a loan with an under $100,000 balance.

Qualifying With Under $100,000 Home Loans

Most loan originators may not take on a mortgage loan applicant who has a loan size under $100,000. This is the case even if their mortgage company may allow mortgage loans of under $100,000. This is due to the fact that it takes so much time in processing and underwrites a small loan size compared to the compensation. With me, I look at the big picture and will even process and underwrite a mortgage loan under $50,000.

Even though I may be doing the work for free. I think of every client as a lifelong client and referral partner. If I take care of them, they will come back to me and will refer their friends, family, and business associates. Just because a mortgage loan applicant has a $50,000 loan and I do a lot of work for next to nothing does not mean that I worked for free. I invested in the client and developed a relationship.

Real Estate Agents

Same with real estate agents. Real estate agents get paid a percentage of the purchase price of a property. Real estate agents will make very little on a $50,000 property. Many real estate agents will steer the home buyer to a higher-priced home. Or not want to represent a home buyer who can only afford a lower-priced home due to the amount of work it entails. However, real estate agents who really truly care for their home buyers and have a bigger vision will not consider the commission. Their main goal is to help the home buyer in locating a home that they could afford and develop a lifelong business relationship with the home buyer.

What Is The Maximum Mortgage Loan Limits?

Every mortgage loan program has maximum mortgage loan limits. Housing prices have appreciated nationwide with no signs of a correction. FHFA Raised Conforming Loan Limits in early 2018 and so did HUD to keep in line with the rising home prices nationally. However, if the borrower does not qualify for one mortgage loan program, they can go with another loan program. Some loan programs have higher mortgage loan limits than others. High-cost areas have higher mortgage loan limits. For any VA Loan over $647,200, it is called a high-balance VA loan. There are no maximum loan limits on VA loans.

FHFA Increase Conforming Loan Limits Changes

Conventional loan programs mortgage lending limits increase to $647,200. If the property is over $400,000 and the buyer has a limited amount for the down payment, they can try to see if they can qualify for a conventional loan versus an FHA loan due to the maximum mortgage loan limits restrictions of FHA.

However, need to meet conforming guidelines. Conventional loan qualification requirements are not as lenient as FHA loan programs. Those who want to purchase higher-end homes that exceed the $647,200 conforming mortgage loan limits unless the property is located in high-cost areas may need to resort to portfolio loans or jumbo mortgages.

Conforming Loans Versus Jumbo Mortgages

There are jumbo mortgage loan programs that only require a 10% down payment. Jumbo mortgages have much tougher mortgage lending qualification requirements with regards to credit scores and debt-to-income ratios. Most jumbo mortgage lenders will require a minimum of 700 credit scores and debt-to-income ratios not exceeding 40% DTI. FHA Lend Mortgage offers non-QM loans where there is no waiting period after the housing event.

There are no maximum mortgage loan limits on non-QM loans. We also offer bank statement mortgage loans for self-employed borrowers. There are no loan limits on non-QM loans and bank statement mortgage loans for self-employed borrowers.

2022 Loan Limit UPDATE

Both HUD and the Federal Housing Finance Agency have raised the FHA and Conforming Loan Limits for 2022. FHA loan limit for 2022 is now capped at $420,680 The FHFA raised Conventional loan limit caps to $647,200 The Veterans Administration has no maximum loan limit effective January 2022. FHA Lend Mortgage has no lender overlays on government and conventional loans.

HUD and The FHFA Increase Conforming Loan Limits To Avoid Buyers Being Priced Out of the Housing Market

Fannie Mae and Freddie Mac have maximum conforming limits. The Federal Housing Finance Agency (FHFA) has increased conforming loan limits to $647,200 due to skyrocketing home prices. This is the sixth increase in two years in a row. The rise in conforming loan limits for two consecutive years in a row was due to ever-increasing home prices nationwide. HUD, the parent of FHA, followed FHFA conforming loan limits increase and raised FHA Loan Limits to $420,680. HUD also increased FHA Loan Limits on FHA High-Cost Areas nationwide to $970,800. The FHFA, or Federal Home Finance Agency, is the decision-maker of conforming limits.

What Is A Conforming Loan?

Conforming loans are conventional loans that conform to Fannie Mae and/or Freddie Mac Mortgage Guidelines. Conforming loans need to meet all of Fannie Mae’s or Freddie Mac’s lending guidelines. This is including the maximum loan limit amount. In order for Fannie Mae or Freddie Mac to buy the loan from lenders that originate and fund the mortgage loan, it needs to conform to their guidelines. If the loan does not conform to Fannie Mae or Freddie Mac guidelines, these two government-sponsored enterprises (GSE) will not purchase loans from lenders or financial institutions that originate and fund the loan.

Jumbo Mortgage

Mortgage loans exceeding the conforming loan limits of $647,200 are non-conforming loans  This is because they do not conform to Fannie Mae and Freddie Mac loan limit guidelines. Home Mortgages exceeding $647,200 are also called Jumbo mortgage loans. Jumbo Loans are mortgages that are not backed by Fannie Mae or Freddie Mac or any other government agency. Jumbo lending guidelines depend on the individual lender. They are often tougher and stricter than conforming lending guidelines.

Mortgage Rates on Jumbo Loans

Mortgage rates for Jumbo mortgages are often higher than traditional loans. The debt to income ratio cap is often capped at 43% DTI. Most Jumbo Lenders require borrowers to have at least 700 credit scores. 20% down payment is often required for Jumbo Loans. I have traditional Jumbo mortgage programs which only require a 10% down payment. However, a 740 credit score is required. FHA Lend Mortgage has alternative finance loan programs on Jumbo Mortgages. Non-QM Jumbo Mortgage Programs has jumbo mortgages for self-employed borrowers with no tax returns required. Minimum credit scores of 500 FICO on Non-QM jumbo mortgages.

Increases In Conforming Loan Limits In Certain Counties

As mentioned, the national conforming limits have increased to $647,200. However, the government has made exceptions to the national conforming lending limits in certain areas of the United States. There are many counties in the United States where the median home values and prices exceed the national average home prices. These areas are often designated high-cost areas. A total of 234 areas in the country have been designated high-cost areas. Many areas in California are designated high-cost areas. Conforming loan limits in high-cost areas vary depending on the number of units. For a single-family home, the maximum loan size is capped at $970,800.

Cases When Home Buyers Need Higher Loan Limits

There are instances where home buyers need a higher-priced home and higher loan limits. HUD set maximum FHA Loan Limits at $420,680. Maximum Conforming Loan Limits is capped at $647,200. Home Buyers who need higher-priced homes and higher loan amounts and want to avoid traditional jumbo mortgages can qualify with our non-QM loans and bank statement loans for self-employed borrowers.

There are no loan limits with non-QM loans and bank statement loans for self-employed borrowers. 10% to 20% down payment is required and the amount of down payment required depends on borrowers’ credit scores. There is no private mortgage insurance required with both non-QM and bank statement loans for self-employed borrowers. There are no tax returns required on bank statement loans for self-employed borrowers.

There are no maximum loan limits on non-QM and bank statement loans for self-employed borrowers. For more information and qualify for a home loan with a direct lender with no mortgage overlays on government and conventional loans, please contact the team at FHA Lend Mortgage at 888-900-1020 or text us for a faster response. Or email us at contact@capitallendingnetwork.com.

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