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Prospective new homeowners may be wondering what the highest amount is that they can borrow with a conventional mortgage loan because once you borrow over a certain amount, you have to deal with the stricter underwriting requirements of a jumbo loan product. Well, good news is ahead for both buyers AND sellers in 2022.

In 2021, the limit for a mortgage in Texas was around $548,000. This week, the Federal Housing Finance Agency (FHFA) announced that the 2022 loan limit for conventional loans will go up over 18% to $647,200.

Mortgage Limits Increasing

What does the mortgage limit increase mean for you? It can mean two things depending on which direction you are going as a homeowner.

You can either buy a more expensive house because of the increased loan limit or you will not have to put as much money down for the homes that were in your budget range.

When it comes to buying a home, you generally have to put down at least 3% at minimum to qualify as a buyer. So, if you were looking for a home in a certain price range but did not have the most savings for a down payment, the previous limit may have prevented you from being able to buy that home.

Let’s say that you are trying to buy $625,000 this year. To meet the mortgage limit right now, you would have to have a 13% down payment ready to go to stay under that limit, rather than the minimum of 3%.

Now, with $625,000 to play around with when it comes to mortgage limits, you only have to come up with as low as 3% of the money right away. Assuming you qualify to do that, that can save you more than $62,000 to have to come up with in advance.

Interest Rates Expected to Go Up

One projection for next year comes from Fannie Mae, stating they expect 30-year mortgage rates to be 3.3% in 2022 compared to an average of 3.1% in 2021.

What does that mean? It means that if you take a 30-year mortgage on your home and do not pay your home off early, you are going to be paying more interest on your home if you buy it next year than you would this year.

Let’s say that you put 10% down on a home that costs $625,000 and you have a 3.3% mortgage rate on the remainder of the balance rather than 3.1%.

In this situation, you would be paying over $22,000 more on the projected 2022 rate than you would on the average rate you could get in 2021.

This may be partially due to inflation and partially due to the demand of the housing market but either way, expect to have to pay a little more in interest starting next year.

Learn More About the 2022 Conventional Mortgage Loan Limits

These are some of the 2022 projections for mortgage loan terms. Does that make you more encouraged or less encouraged to buy a home?

If you are ready to take the next step, contact us today to discuss your mortgage options.

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