Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research determine where and how companies may appear. Learn more about how we make money.

House With A Large Front Lawn
Getty Images

Skyrocketing home prices have plagued buyers for much of the last year. While 2022 will likely see more of the same, homebuyers will at least have one new crutch to lean on: Bigger government-backed mortgage loans.

According to the Federal Housing Finance Agency, conforming loan limits — or the maximum buyers can get with a conventional, Fannie Mae- or Freddie Mac-backed mortgage, are increasing significantly in the new year.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
The first step to a new home is putting in the work and finding out how much you can afford
Mortgage Experts at Quicken Loans (NMLS #3030) are available to get you started on your home-buying journey with solid advice and priceless information. To find out more, click on your state today.
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
Get Started

In the majority of markets, that means a limit of $647,200 on a single-family home, up from $548,250. In higher-cost areas like Los Angeles or Honolulu, for example, it reaches $970,800, up from $822,375 this year. (Use this map to find the limits in your area.)

“Increased conforming loan limits give borrowers more buying power,” says Phil Shoemaker, president of originations at Homepoint. “They’re now able to get higher financing for loans through Fannie Mae and Freddie Mac, which come with lower interest rates than the alternative option of jumbo loans through private lenders.”

Jumbo loans are mortgages that go beyond the conforming loan limits. These come with stricter qualifying standards and higher interest rates.

Though the FHFA updates the conforming loan limits on a county-by-county basis annually, according to Robert Heck, vice president of mortgage at Morty, increases have historically been 10% or less. This year’s increase tops 18%.

“The limits typically increase each year based on changes in housing prices across the country,” Heck says. “This year’s increase reflects the speed at which housing prices have risen.”

The latest FHFA data shows home prices were up 18.5% between the third quarter of 2020 and the third quarter of 2021. Prices rose the most in the West, with Idaho, Utah, Arizona and Montana leading the pack. In Idaho, prices soared nearly 36% over the last year.

By most accounts, home prices will continue to rise in 2022, though at a slower speed than seen this year. Freddie Mac predicts prices will rise 7% next year, while property data firm CoreLogic expects a much smaller 2% uptick.

Fortunately, the increase in loan limits should give buyers more options when dealing with those rising prices — however large (or small) they may be.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Jumbo Mortgages put high-cost properties within reach.
If your dream home requires a jumbo loan, Quicken Loans offers competitive rates and flexible options that will help turn that dream into a reality. Click below for details.
Start Today

More from Money:

4 Signs the Hot Housing Market Is Finally Starting to Cool

Paying Your Rent on Time Can Now Help You Qualify for a Mortgage

Current Mortgage Rates