Conforming loan limits in Orange County for 2022 will increase to $970,800 for a one-unit home or condo. So what does this mean?
- Buyer’s can now obtain conventional financing (20% minimum down payment) on purchases up to $1,213,500 ($1,213,500 x 80% = $970,800
- Purchasing a home at this same price would require jumbo financing under the old conforming loan limit of $822,375
- Jumbo financing is more expensive or has a higher interest rate as the lender assumes greater risk (cannot sale the mortgage back to the government) and requires cash reserves (often a minimum of 6 months).
- Jumbo financing requires a higher credit score to qualify, so the higher conforming loan limit will help those qualify that have sufficient income, debt-to-income, and assets.
- FHA loans can now be obtained up to the conforming loan limit, increasing purchasing power to just over $1.0M, however, these loans are more expensive as they come with private mortgage insurance (PMI) and have more stringent guidelines in closing a deal. FHA loans are hard to get done in today’s seller’s market
For more information on these changes and questions, please feel free to each out to us.