Why 2022's Loan Limits Are Sky High

What used to be considered a jumbo loan may now become the norm. The Biden administration and the Federal Housing Association just released the new mortgage loan limits on single-family homes for 2022, and it will be the largest one-year increase in our country's history. The 18% increase has raised the limit of conforming loans by up to $148,425 depending on location and has set the bar for first-time homebuyers to nearly one million dollars in certain counties.

This loan limit is based on the House Price Index (HPI) report, which takes into account average housing prices by county in comparison to the average prices across the country. It is a weighted, repeat-sales index that takes into account the average price changes in repeat sales or refinancings on the same properties going back to 1975. When sales prices increase, the Federal Housing Association will increase the next year's loan maximums so that FHA mortgages or refinancing offered by Fannie Mae and Freddie Mac remain accessible and competitive.

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Source Fool.com