The 2022 conforming loan limits have been issued by the Federal Housing Finance Agency, and they reflect the massive run-up in home prices statewide.
For much of New Hampshire, the largest mortgage on a single-unit property that Freddie Mac and Fannie Mae will buy in 2022 is $647,200. That’s a nearly $100,000 increase from the current limit of $548,250.
However, for Rockingham and Strafford counties, that figure is $770,500, reflecting the even greater demand for homes in that area and their even greater price. According to The Warren Group, publisher of The Registry Review, the year-to-date median home sale price in Rockingham County – the state’s most expensive – was $475,000 through Oct. 31, while Strafford’s was $330,000 compared to the statewide median of $373,000. The FHFA did not raise Hillsborough County’s conforming loan limit despite a year-to-date median sale price of $405,000.
The huge jumps in conforming loan limits year after year in recent years appear to have struck a nerve with FHFA officials, however.
In a separate statement following the release of the 2022 conforming limits, FHFA Acting Director Sandra L. Thompson pointed to counties like Martha’s Vineyard and Nantucket in Massachusetts that now have conforming loan limits close to $1 million and said the FHFA is evaluating how loan limits are calculated.
“Compared to previous years, the 2022 Conforming Loan Limits represent a significant increase due to the historic house price appreciation over the last year,” Thompson said. “While 95 percent of U.S. counties will be subject to the new baseline limit of $647,200, approximately 100 counties will have conforming loan limits approaching $1 million. FHFA is actively evaluating the relationship between house price growth and conforming loan limits, particularly as they relate to creating affordable and sustainable homeownership opportunities across all communities.”
Upward adjustments to the conforming limits are widely seen in the mortgage industry as helping consumers continue to affordably purchase homes as prices spiral higher amid a generational slump in new construction. Conforming mortgages financed by government-sponsored entities and the FHFA are the most lenient, allowing eligible first-time homebuyers to put down as little as 3 to 5 percent in some cases. Jumbo loans, on the other hand, require borrowers to have higher FICO scores and larger down payments, and also come with asset and reserve requirements.
The FHFA adjusts the conforming loan limit annually to reflect the change in the average U.S. home price, as required by the Housing and Economic Recovery Act. Conforming loan limits had remained stagnant for a decade, but since 2016, the limit has increased each year.
The baseline maximum conforming loan limit in 2022 will increase by the same percentage as the FHFA’s estimated housing price increase. Using its third quarter 2021 House Price Index report, the FHFA calculated the increase based on estimates of the average U.S. home value over the last four quarters. According to FHFA’s seasonally adjusted data, American house prices increased 18.05 percent between the third quarters of 2020 and 2021. Because of rising home values, almost every U.S. county will see an increase in conforming loan limits, the FHFA said.
