FHA Multifamiliy Housing Loan Limits
FHA loan limits for multifamily housing in 2022 have increased. The Federal Housing Administration announced that the 2022 multifamily loan purchase caps for Fannie Mae and Freddie Mac (the Enterprises) will be $78 billion for each — a combined total of $156 billion to support the multifamily market.
The 2022 caps, which increased from $70 billion for each Enterprise in 2021, are based on FHFA’s projections of the overall growth of the multifamily originations market.
At least 50% of the Enterprises’ multifamily loans are required to be used for affordable housing. FHFA also requires at least 25% of the Enterprises’ multifamily business be affordable to residents at or below 60% of area median income (AMI), up from 20% in 2021.
In addition, FHFA has changed certain definitions of multifamily mission-driven affordable housing in Appendix A of the Conservatorship Scorecard. In 2022, FHFA will allow loans on affordable units in cost-burdened renter markets and loans to finance energy or water efficiency improvements with units affordable at or below 60% of AMI to be classified as mission-driven.
FHFA will continue to monitor impacts of COVID-19 on the multifamily mortgage market and will update the multifamily caps and mission-driven requirements if adjustments are warranted. However, to prevent market disruption, if FHFA determines that the actual size of the 2022 market is smaller than was initially projected, FHFA will not reduce the caps.
FHA Loan Limits 2022 for Single Family Homes
The Federal Housing Administration (FHA) has increased loan limits for 2022. The nationwide rise in median home prices indicates most buyers across the country will see increases. The FHA floor will increase from $356,362 to $420,680 for single-family home loans. The floor amount is the lowest the FHA loan limit can be for any area of the country. FHA’s ceiling loan limits, the maximum loan amount the agency will insure, will increase from $822,375 to $970,800 for a single-family property.
Homebuyers seeking to purchase a house in Cherokee, Cobb, Forsyth, Fulton, Gwinnett, Paulding or Henry Counties can be approved on an FHA loan for up to $471,500 This added flexibility has certainly supported the strong market and activity that we’ve seen in the Atlanta real estate market. For those that don’t know, the FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States. The new loan limits will apply to all loans assigned FHA case numbers on or after Jan. 1, 2022. The 2022 FHA loan limits by Metropolitan Statistical Area (MSA) or county can be reviewed on FHA’s loan limits webpage.
FHA-insured loans are extremely popular, especially for first time homebuyers, because they offer more flexibility in terns of low down payment options, down payment options (allow gift or seller contributions), and ability to combine purchase and rehab financing from a 203k. . There is also more flexibility in calculating household income and payment ratios. The FHA was the government’s solution to a nation comprised primarily of renters, only 4 in 10 households owned homes. Of course this was back in the 1930’s, as the FHA was created in 1934. However, this government agency successfully turned America into a nation of homeowners, with a 68.1 % homeownership in 2001. Enough with the history lesson, get on the phone, get online or get out the door and find yourself a spectacular home in the metro-Atlanta area because getting approved for a $400,000 loan has now been made much easier.
Conventional Single Family Home Loans
The Federal Housing Finance Agency (FHFA) announced today that the maximum baseline conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2022 will rise to $647,200 — an increase of $98,950 from $548,250 in 2021.
The conforming loan limits are required by the Housing and Economic Recovery Act (HERA) to reflect the percentage change in the average U.S. home price during the most recent 12-month or 4-quarter period ending before the time of determining the annual adjustment. In 2022, the conforming loan limit will rise 18.05% because FHFA has determined that the average U.S. home value increased by that amount between the third quarters of 2020 and 2021.
Higher loan limits will be in effect in higher-cost areas as well. The new ceiling loan limit in high-cost markets will be $970,800. The previous ceiling was $822,375.
“These increases are an important step to ensure that government-backed mortgages keep pace with the sharp rise in home prices over the past year,” said NAHB Chief Economist Robert Dietz. “Supply-side challenges — including building material bottlenecks and lot and labor shortages — will continue to place upward pressure on construction costs and home prices in 2022.”
In its news release, FHFA said that due to rising home values, the ceiling loan limits will be higher in all but four U.S. counties or county equivalents in 2022.
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Saving for a Home Loan
For many first time home buyers, the biggest obstacle to owning a home is coming up with a down payment and the other funds needed to close on a home. While move-up buyers have a current home to sell, first-time buyers have nothing to use toward a down payment except savings.
The down payment amount can vary widely depending on the price of the home and the type of loan the buyers receive.
- Conventional loans downpayments start at 3 percent (This varies with your personal situation and the type of property you are buying)
- FHA loans require 3.5 to 10 percent down
- VA loans typically require no down payment
- USDA loans require no down payment. These loans can be used buy a home in certain designated rural and suburban locations — certain Atlanta areas qualify.
Also factored into the purchase of a new home are closing costs, which are provided by the lender in the Loan Estimate. The Loan Estimate covers expected closing costs. Three days before closing, home buyers receive a Closing Disclosure which will have final numbers. If anything changes significantly after that, buyers receive a revised Loan Estimate to avoid any surprises at closing.
Once you determine your budget for the home you plan to buy, it’s safe to assume you’ll need to save for a down payment, as well closing costs. You may also need to take mortgage insurance (for FHA loans) or primary mortgage insurance (for conventional loans) into account. These are required for downpayments below 20%. Especially with home values rising so fast, it’s easier to get into a home with a low down payment and pay PMI than it is to save up for a larger down payment. Once you determine the total amount that you’ll need to save and the amount of time you have to save, you can determine how much you need to save per month.
An Overview of the Mortgage Process
Many potential home owners come into the mortgage process without any idea of what to expect. So, here are some of the most frequently asked questions to help you gain a better understanding of mortgage loans.
What is a mortgage loan? A mortgage loan is a loan used to buy a home. The home serves as collateral for the loan and acts as a guarantee that the loan will be repaid.
How are mortgage loans approved? There are several factors involved in the approval process of your mortgage application. These include your income, your current debt, your credit history, your employment history and the property itself. Each applicant’s specific situation is different and all these factors need to be evaluated by a mortgage lender during the approval process.
How much income do I need? This depends upon how much of your total income will be spent on housing. Mortgage lenders usually use your gross income to determine the monthly mortgage payment you can afford.
What percentage of my income can be used for mortgage payments? In general, lenders require that your total monthly mortgage payment should be no more than 28% to 33% of your monthly gross income. This includes principal, interest, property taxes, mortgage insurance, hazard insurance and any homeowner association dues.
What about other debt? Your mortgage payment is just one part of your total monthly expenses. You may have a car loan, student loan, credit cards, child support, alimony or other monthly expenses. Your mortgage lender will look at your debt to income ratio.
What if my credit history isn’t perfect? A satisfactory record of paying your bills on time is an important part of getting a home loan. But many people may experience hardships that are beyond their control. If you’ve had credit difficulties within the past two years, a good explanation of any late or missing payments on your credit report may be taken into consideration.
What kind of employment history must I have? A history of steady employment and/or earnings, no matter what your profession, is desirable. You will need to verify employment. If you are self-employed, work on commission or have been at your job less than two years, you may need to provide additional information about your work history.
What’s a property appraisal? Before a mortgage loan is approved, the appraised value of the home must be determined. An appraisal is based on the home’s condition and selling prices of comparable properties in the area, and confirms that the property is worth the purchase price you are offering for the home.