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Conventional Loan Limits

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Photo by Toa Heftiba on Unsplash
Josh Rapaport
February 9, 2023

Conventional loans are easy to get and require a low down payment. The best part is that District Lending will help you find a suitable lender with the best limit at low rates. Read on to know the 2022 conforming loan limits and requirements needed to qualify for a conventional loan.

What Are Conventional Loans?

Conventional loans are a type of mortgage that private lenders, such as state agencies, credit unions, banks, universities and other lending companies offer. The loan is not backed up by the federal government. However, they are approved based on the rules Freddie Mac and Fannie Mae enterprises set.

Many organizations love to divide conventional loans into two to make it easier for lenders to understand. They include;

  • Conforming Loans: These are loans that conform to the rules and regulations put in place by the Fannie Mae and Freddie Mac corporations. The enterprises purchase the mortgages and offer them to borrowers at a certain rate. Conforming loans also have a limit set for low and high-cost areas, meaning you only qualify for a loan limit depending on where you plan to purchase a house.
  • Non-Conforming Loans: The non-conforming conventional loan is not regulated by any government entity. It is neither buyable by Freddie Mac or Fannie Mae enterprises. These loans are entirely issued by the private sectors and do not have a set limit. Also, requirements may vary depending on the lender you’re dealing with.

How Conventional Loan Limits Work

New conventional loan limits are usually announced yearly, depending on the current market trend. Each year, new figures are set due to the changes in home prices. When you look at the conforming loan limit chart representing the loan limits from 1980 to 2022, you will realize that the prices change quickly.

In the early 1980s, the loan limit for a one-unit home was below $200,000. By 2010 it was at about $300,000, and now the lowest limit is $600,000, while the maximum conventional loan amount is about $1 million. Here is a simple graph showing how conventional loan limits change with time;

The limits do not always change for every county in the United states. In 2020, 43 counties had the same loan limit as the previous year. But all the same, people still love conventional loans because of;

Low Down Payment Option Available

Conventional loans are suitable for first-time home buyers since they offer a down payment option starting from 3%. In the past, many lending companies wanted a down payment of 20%, but you can now start with a low-down payment of 3% if you have met all the other requirements.

If your credit score is poor, you can still qualify for a loan, but you will need to start with a slightly higher payment, depending on your lender. This shouldn’t worry you because District Lending is here to help you get a suitable lender faster and quickly, even if your income report and credit score aren’t that appealing.

It can Be Used to Buy Other Properties

If you wish to purchase investment properties, applying for a conventional loan should be the way forward. Unlike the FHA loan, which is strictly for the primary home, conventional loan lenders allow you to purchase second homes and other properties you wish to buy.

Higher Loan Limit

Conventional loans allow you to purchase expensive homes. This is because the limits are high, and you can get a limit of up to $1 million with a low-interest rate. Also, the conventional conforming loan limit 2022 is issued based on your county. For example, if you live in a high-cost area like California, you can qualify for a higher loan limit than someone in Tennessee.

Conventional Loan Limit by County

Conforming loan limits 2022 by county is one thing you should pay attention to if you plan to apply for a conventional loan. Different counties have different loan limits. When applying for a loan, the amount you qualify for will depend on the unit you want to purchase and your location. Below is a table showing conventional loan limits in low and high-cost areas;

Low-cost AreaMedium-cost AreaHigh-cost Area
One Family Home$647,200$647,201 to $970,799$970,800
Two Family Home$828,700$828,701 to $1,243,049$1,243,050
Three Family Home$1,001,650$1,001,651 to $1,502,474$1,502,475
Four Family Home$1,244,850$1,244,851 to $1,867,274$1,867,275

Keep in mind that these 2022 conventional loan limits are not the exact amount that you will get when you apply for a conventional loan. They are just estimations of what you should expect to get when you apply for the mortgage.

A lot of things go into the application and approval process. Your lender will check your credit score, down payment, location, and the unit you plan to purchase. These are some of the things that will determine how much loan you qualify for.

What if my loan limit surpasses the conforming loan limit set by the Federal Housing Finance Agency (FHFA)? If you want a higher loan limit to purchase an expensive house, you should opt for conventional jumbo loans. Jumbo loans can go from $2 million to $3 million, but they require a higher down payment.

In other words, jumbo loans have strict standards. First, you must have an outstanding credit score and income report.

If you do not meet the required credit score, you will be asked to make a larger down payment. The good news is that District Lending can help you get a private lender that can offer you a jumbo loan with a reasonable interest rate and down payment.

What Do I Need to Qualify for a Conventional Loan?

As mentioned earlier, loan lenders check for particular things to ensure you qualify for the loan you are borrowing. This is also to ensure you won’t default on the loan and will manage to pay the agreed-upon monthly fees. Here are some of the things almost all lenders will check before approving you for a conventional loan;

  • Credit Score: To qualify for a good conforming mortgage limit, you must have a FICO score of 620 and a score of 700 to qualify for a conventional jumbo loan. If you have a score below the required limit, you may still qualify for a conventional loan, but the lender will need you to place a larger down payment. He might also check your income history to determine whether you will manage to pay the monthly rates set.
  • Down Payments: You must also have a down payment to get a conventional loan. The payments usually begin from as low as 3%, which makes it easy for first-time home buyers to qualify for the loan. However, this usually changes depending on the property intended for purchase and your current situation. For example, if your median income is less than 80% and you’re not a first-time buyer, you may need to start with a down payment of 5%. Also, if you are purchasing a house with more than one unit, you will need to start with a down payment of 15%. People who are also buying second homes have to put 10% down. The good news is that District Lending can help you find a private loan lender offering a high loan limit with a low down payment and interest rate. Therefore, there is no need to worry much about this because different lenders ask for different down payments.
  • Income Report: A good income report will improve your chances of qualifying for a conventional loan. The lender will check if your monthly income is enough to cater to the interest rates required to be paid monthly.
  • Private Mortgage Insurance: PMI is also important to the loan lender. If you start with a down payment of less than 20%, you will be required to get private mortgage insurance. This protects the lender in case you fail to repay the loan. Luckily, the PMI is not there to stay throughout the loan period. Once you attain 20% of your regular loan payment program, your lender will remove private mortgage insurance from your loan.
  • Debt-to-Income Ratio (DTI): DTI is the number that shows how much of your income is used to pay off debts. These debts may include school loans, credit cards, auto loans, etc. Many lenders always want a debt-to-income ratio of 43%, but some can accept a DTI of 50%.
  • Loan Limit: When applying for a loan, you should consider the limit. The max conventional loan 2022 in a low-cost area is $647,200 for a one-unit home. If you want a higher loan, you have to shop to find a suitable lender. Also, know that your lender will consider the limit you are asking for, therefore, do not apply for a loan limit much higher than the home you plan to purchase. Otherwise, you will fail to qualify for the loan limit you want.

Conventional Loan Vs. FHA Loans

While conventional mortgages and FHA loans may appear to be similar, there are a few things that distinguish them. They include;

Conventional LoansFHA Loans
FICO ScoreIt should be more than 620It can be as low as 500
Down Payment5% to 20% is what is required, but you can start from as low as 3%You must put 3.5% down
Debt-to-Income RatioNothing more than 43%, but some lenders will require a DTI of not more than 36%50% is the maximum
Upfront CostsWith a 20% down payment, the lender will automatically cancel your private mortgage insurance.2.25% Mortgage Insurance Premium and can’t be canceled throughout the loan.

Are Conventional Loans Worth It?

Conventional loans are the best for first-time home buyers. First, you can get a lender quickly and easily with the District Lending company. Also, the down payment starts from as low as 3%, and you can qualify for any limit. All you need is to check the Fannie Mae county loan limits, your credit score, and your income report. This will help you know what to repair before applying for a loan.


What are conventional loan limits for 2022?

Conventional loan limits vary depending on the county you live in. In low-cost areas, it is $647,200, and in high-cost areas, it is $970,800. This is the limit set for a one-family home.

Are conventional loan requirements necessary?

To qualify for a conventional loan, you need all the requirements, and they must meet the standards set by your lender. You should have a good income report, credit score, and a down payment, among many other things.

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