Your Buying Power Just Increased! Max Loan Limits for 2022 - YouTube

The Federal Housing Finance Agency  or FHFA is increasing their max  

loan limits for 1-4 unit properties in 2022. Plus I m going to talk about another new guideline  

that no one s talking about that could help  you qualify for your next mortgage or home  

purchase so please watch until the end  and let me know if you have questions.  

FHFA is essentially the government agency  that controls the two government sponsored  

enterprises Fannie Mae and Freddie Mac. Fannie and Freddie write all the rules  

that banks and lenders have to follow when  approving you, the borrower or buyer for  

a home loan or mortgage loan. When we talk about Conventional  

loans we re referring to Fannie Mae and Freddie  Mac mortgage products, not FHA, USDA or VA.  

And there are max loan limits  that you have to be under when  

purchasing a 1-4 unit residential property. You can see the previous max loan limits here for  

1, 2, 3, and 4 unit properties. So if you  re purchasing a duplex, you can go higher on  

the purchase price than a 1 unit property. The current conventional loan limit is  

$548,250 and any dollar amount above that is  considered a Jumbo loan, which typically has  

more stringent underwriting guidelines and are  harder to qualify for (can you put this on the  

screen next to me . However, the new max  loan limit for a 1 unit property in 2022  

is $625,000 which is $76,750 higher than before. And with some lenders, you can actually  

go up to these loan limits right now before  the limit officially goes up on January 1st.  

It s no surprise that the max loan  limits are increasing given the rapid  

price appreciation we ve seen around the nation. Here s the monthly housing price index graph from  

1991 to June 2021 and you can see the slightly  steeper price appreciation in recent years  

One thing to note when looking at the loan limit  chart is that the last time we had this big of an  

increase in the max loan limit was back in 2006  and we all know what was happening back then.  

You can see the double digit price appreciation  in most states from June 2020 through June  

2021 (insert 20q2 to 21q2 pic) Most of the west coast experienced  

20% price appreciation, (zoom in  on west coast 20q2 to 21q2 pic)  

15% to more than 20% on the east coast  and 10% - 15% increases in the Midwest.  

Minnesota experiencing 14.9% price  appreciation according to FHFA.  

Going back to the 1980 s the FHFA has increased  the max loan limits to keep up with real estate  

prices and pretty much raises them every year. The only period of time they didn  

t was from 2007 to 2016 And actually even during that time period,  

prices in MN were increasing. Take a look at  this average sale price and you can see that  

prices have been increasing since 2011. The average sale price as of August 2021  

was approximately $367,000. So if you are  a buyer and you want to put the minimum  

down payment on a house, which is 3% down,  not 20%, you can now purchase a $644,000 house  

putting just 3% down. Or if you re purchasing a 2 unit,  

the max loan amount is $800,250 loan amount  which would equal a $941,000 purchase price  

if you re putting the minimum 15% down. $967,250 max loan amount for a tri plex,  

which would be a $1,289,000  purchase piece with 25% down.  

$1,202,000 max loan amount for a four  plex, which would be a $1.6 million dollar  

purchase price with 25% down. If you ve recently been looking  

for homes, you ve probably noticed that prices for  the houses you really want are higher and may be  

more than the current conforming loan limits. And if you go above the conforming loan limits,  

you are in Jumbo territory which  means you have another set of rules  

you have to follow in order to qualify. Which typically means you need 10% down,  

you have to have 6-12 months of reserves or  extra savings above and beyond your down payment,  

lower debt ratio limits and higher credit  score requirements just to name a few.  

So if you can be under the max limit by  putting 3% or more down, you might have  

an easier time qualifying for a conforming  conventional loan instead of a jumbo loan.  

Now for the big news that no one s talking  about. Fannie Mae recently announced a big  

change to how they calculate your  credit scores used to qualify.  

You may Know that the minimum credit score  for a conventional loan is technically 620,  

but now if you have to borrowers on and one person  has a low 580 credit score and the other has a  

700, Fannie mae will average the scores! This is actually a pretty cool new rule if  

you ask me because I always talk to a husband  and wife or a couple who want to buy a house  

together and one person has a not so great  score but makes all the money and the other  

person has a great score but doesn t make  enough income to qualify on their own.  

Does this sound like you or someone you know? This makes a lot of sense and it s about  

time they made a rule like this. This is in addition to another rule I talk  

about in a previous video about using your past  rent payments as a positive factor when qualifying  

for a mortgage. For instance if you are trying to  qualify for a conventional loan instead of FHA,  

and your credit isn t super awesome, like a 640 or  a 660 or something you can actually show that you  

ve made on time rent payments for the last 12  months and that will actually help you qualify.  

There has been significant changes just  in the last 12-24 months when it comes  

to mortgage qualification which is a good  thing and these are just a few examples.  

My name is Chris O Connell and I m a mortgage  loan originator in MN (insert name and contact).  

This channel is dedicated to sharing knowledge  with you so you re better prepared to buy  

your first home or your next home. Please subscribe and hit the bell for  

updates to stay informed as mortgage  guidelines and the market changes.  

Otherwise please leave a comment or contact  me directly with any questions.