19 March 2022
Conforming Loan Limit Increase: What it Means for Buyers and Sellers

     With all the hustle and bustle of the holidays, the New Year and of course COVID, one may have missed some very important news on the housing front—specifically in home lending.
     Back in December, the Federal Housing Finance Agency (FHFA) announced the 2022 conforming loan limits would be increased significantly. To be precise, the limit has been elevated to $647,200 in most areas of the country, including San Juan County. This 18% increase ($223,100) is the largest jump in recent history and could be a game changer for buyers who need some additional purchasing power.
If you are thinking about relocating to another area of Washington or the country, refer to the FHA Interactive Map to determine the adjusted limit within your area of interest. Please note that it may be higher in more expensive areas (yes, there are more expensive areas).

Some definitions for reference:

• Fannie Mae & Freddie Mac: Two government-sponsored enterprises that purchase mortgages and repackage them into mortgage-backed securities for investors. Neither institution originates or services its own mortgages. These agencies make the mortgage market more liquid, stable, and affordable by providing guarantees to thousands of banks, savings and loans, and mortgage companies in the U.S.
• Conforming Loan Limit: The dollar cap on the size of a mortgage that Freddie Mac and Fannie Mae are willing to buy or guarantee. Mortgages that meet the support requirements by the two agencies are known as conforming loans.
• Conforming Loan: A mortgage that meets the dollar limits set by the Federal Housing Finance Agency (FHFA) as well as the funding criteria of both Freddie Mac and Fannie Mae. For borrowers with excellent credit, conforming loans are advantageous due to their competitive mortgage interest rates and lower down payment options. Lenders prefer to issue conforming loans because they can be easily packaged and sold in the secondary mortgage market.
• FHFA: Regulatory agency providing supervision, regulation, and housing mission oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

For Buyers…

The increase in conforming loan limits will open doors for many who want to make home ownership a reality. With more available spending power and less due at the closing table, prospective buyers can expand their search. In this competitive high priced island market, buyers need all the help they can get!

For Sellers…

As a whole new pool of buyers can now enter the market, we may see even more competition at the offer table. This scenario typically generates an increase in both home values and sale prices.

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