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Breaking Flooring News

FHA Announces Loan Limit Increases for 2022

stock pic
December 2, 2021

The Federal Housing Administration (FHA) announced new loan limits for calendar year 2022 for its Single Family Title II forward and Home Equity Conversion (reverse) Mortgage (HECM) insurance programs. Loan limits for most of the country will increase in the coming year resulting from robust house price appreciation, which is factored into the statutorily mandated calculations FHA uses as part of its methodology for determining the limits each year. The new loan limits are effective for FHA case numbers assigned on or after January 1, 2022.

“The increase in loan limits, commensurate with the increase in home prices, will allow qualified individuals and families to continue to access FHA-insured mortgages to achieve affordable home financing,” said Lopa Kolluri, principal deputy assistant secretary for housing and FHA.

More on FHA’s Mortgagee Letter on 2022 Forward Mortgage Limits.

More on FHA’s Mortgagee Letter on 2022 Home Equity Conversion Mortgage (HECM) Limits.

FHA is required by the National Housing Act (NHA), as amended by the Housing and Economic Recovery Act of 2008 (HERA), to set Single Family forward mortgage loan limits at 115 percent of area median house prices, subject to a floor and a ceiling on the limits. In accordance with the NHA, FHA calculates forward mortgage limits by Metropolitan Statistical Area (MSA) and county.

The NHA requires FHA to establish its floor and ceiling loan limits based on the loan limit set by the Federal Housing Finance Agency (FHFA) for conventional mortgages owned or guaranteed by Fannie Mae and Freddie Mac. The national conforming loan limit for 2022 is $647,200. FHA’s 2022 minimum national loan limit “floor”, of $420,680 is set at 65 percent of the national conforming loan limit. This “floor” applies to those areas where 115 percent of the median home price is less than the “floor” limit. Any area where the loan limit exceeds this “floor” is considered a high-cost area, and the NHA requires FHA to set its maximum loan limit “ceiling” for high-cost areas at $970,800, which is 150 percent of the national conforming loan limit.

Due to robust increases in median housing prices and required changes to FHA’s floor and ceiling limits, which are tied to the FHFA’s increase in the conventional mortgage loan limit for 2022, the maximum loan limits for FHA forward mortgages will rise in 3,188 counties. In 45 counties, FHA’s loan limits will remain unchanged. By statute, the median home price for an MSA is based on the county within the MSA which has the highest median price.

Additionally, the FHA-insured HECM maximum claim amount will increase to $970,800 from $822,375 for calendar year 2022. FHA’s current HECM regulations do not allow the HECM limit to vary by MSA or county; instead, the single HECM limit applies to all HECMs regardless of where the property is located.

For more information on loan limits, click here. 

KEYWORDS: building materials construction housing market

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Loan Limits

clark@oldmortgageguy.com
June 9, 2022
The maximum loan limits have been increased for the typical Home Equity Conversion Mortgage (HECM) or (Reverse Mortgage) as a response to the dramatic increase real property valuations from February, 2021 to February, 2022 amounting to as much as 19.6% (in just one year) in Southern California. My word of caution, here, is that what the market gives - the market can take away. Forward mortgage refinances and purchases have recently come to a screeching halt because of the Fed's recent interest rate increase with the promise of more increases to come. Therefore, those wishing to take advantage of the higher HECM loan limits need to act swiftly simply because appraisal values will surely fall into the very near future. If you have any questions, please feel free to contact me.

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