Thanks to home prices rising by more than 18% over the last year, the Federal Housing Administration loan limit will increase for almost the entire country in 2022.
According to an announcement by the FHA, the 2022 loan limit for most of the country will be $420,680, an increase of more than $64,000 from 2021's loan limit of $356,362. In 2020, the FHA loan limit was $331,760, meaning loan limits have increased by nearly $100,000 in two years.
The FHA cited “robust house price appreciation” as the reason for the increase.
Just like the loan limits for Fannie Mae and Freddie Mac, the FHA loan limit is dictated by the Federal Housing Finance Agency Home Price Index, which showed an increase in home prices of 18.05% from the third quarter of 2020 to the third quarter of 2021.
As a result, the FHA loan limit for 2022 is increasing by the same amount.
The FHA loan limits will also be increasing in “high-cost” areas, including Los Angeles, San Francisco, New York City, and Washington, D.C. The loan limits in these “high-cost” areas are higher than the rest of the country to account for the higher home prices in these markets.
The 2022 FHA loan limit for the “high-cost” areas will be $970,800, an increase of nearly $150,000 from this year’s limit of $822,375.
However, there are quite a few counties where the loan limits fall between the base loan limit and the “high-cost” limit.
Here are a few examples. In San Diego County, the 2022 FHA loan limit will be $879,750. In some parts of Phoenix, the loan limit will be $441,600. In areas of Denver, the 2022 loan limit will be $684,250. In a number of counties in the Atlanta area, the loan limit will be $471,500.
Overall, due to those “robust increases” in home prices, the FHA loan limits will be increasing in 3,188 counties and remaining the same in just 45 counties.
That’s an increase over this year. In 2021, the loan limits rose in 3,108 counties and stayed the same in 125 counties.
“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,” Principal Deputy Assistant Secretary for Housing and FHA Lopa Kolluri said in a statement.
The new loan limits go into effect on Jan. 1, 2022.