Home Loans By Nicole Newton

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Jumbo Loans

Makes sense for more affluent buyers purchasing a home above the conforming loan limit. Borrowers should have good to excellent credit, high incomes and a substantial down payment.

What is Jumbo Loans?

Jumbo loans are more common in areas where home prices are higher, and these types of loans make sense for more affluent buyers purchasing a home in these areas. Jumbo Loan borrowers should have good to excellent credit, high incomes, and a substantial down payment. Jumbo loans are non-conforming and apply when the home’s purchase price exceeds federal loan limits. In 2021, the federal loan limit in the Dallas-Ft. Worth area is anything above $548,250.

Pros and Cons

Pros of Jumbo Mortgages
• You are able to borrow more money to buy a home in a high-cost area
• Interest rates tend to be very competitive for this type of loan

Cons of Jumbo Mortgages
• A down payment of 10-20% is needed
• You’ll need a FICO score of 700 or higher (although, you may be able to get by with a 660)
• Your debt-to-income ratio cannot be above 45%
• You’ll need to prove that you have significant assets in cash or your savings account

Loan Limit

Conforming Loan Limit Increased to $647,200

A conventional mortgage loan is one that is not insured or guaranteed by the government. The term “conventional” is used to differentiate these products from the government-backed programs like FHA and VA.

Now let’s break it down further.

In terms of their size, conventional loans can either be conforming or jumbo.

  • conforming loan is one that meets the guidelines and parameters established by the Federal Housing Finance Agency (FHFA). It can be sold into the “secondary” mortgage market via Freddie Mac and Fannie Mae. It conforms to their standards, hence the name.
  • jumbo loan, on other hand, exceeds the conforming loan limit for the county where the home is located.  Therefore, it cannot be sold to Fannie or Freddie.

Federal housing regulators determine the conforming loan limits for the Dallas-Fort Worth area, and for the rest of the country. Subsequently in 2022, those limits will be going up due to rising home prices nationwide.

In November, the FHFA announced that “the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2022.  In most of the U.S., the 2022 maximum conforming loan limit (CLL) for one-unit properties will be $647,200, an increase from $548,250 in 2021.”

In 2022, the conforming loan limit for a single-family home in the DFW area is $647,200.

This applies to all counties within the Dallas-Fort Worth-Arlington metropolitan area (a.k.a., DFW metroplex). Collin, Dallas, Denton, Ellis, Hunt, Johnson, Kaufman, Parker, Rockwall, Tarrant and Wise counties all have the same conforming loan limit for 2022 — $647,200.

Maximum Loan Amount

Jumbo Mortgage Threshold Going Up as Well

Home buyers with sufficient income can borrow more than the DFW conforming loan limit mentioned above. In industry lingo, this financing option is referred to as a “jumbo” loan.

In 2022, a jumbo loan in the Dallas-Fort Worth area is anything above $647,200.

Jumbo mortgage products tend to have stricter criteria, due to the larger amount being borrowed. Borrowers seeking a jumbo loan in Dallas must show that they have enough income to manage the monthly mortgage payments, along with other recurring debts. This is true for all mortgage loans, but the “bar” is typically set higher for jumbo loans due to their larger size.

Maximum FHA Loan Amount for Texas: $420,680

The Federal Housing Administration (FHA) loan program has its own unique set of loan limits. These mortgage loans are originated by lenders within the private sector, as with conventional. Unlike conventional mortgage products, FHA loans are insured by the federal government.

The Department of Housing and Urban Development (HUD) oversees the FHA program. In early December, HUD officials announced that the FHA loan limits for the DFW area — and most other counties across the U.S. — would be increased for 2022.

The 2022 FHA loan limit for the state of Texas will be $420,680, a slight increase from the 2021 limit of $411,700. That’s for a regular single-family home with only one residence. There are higher limits for duplexes and other multifamily properties.

Here are the DFW FHA loan limits for 2022, across all property types:

  • One-family: $420,680
  • Two-family: $538,650
  • Three-family: $651,050
  • Four-family: $809,150

As with the conventional caps above, these FHA limits apply to all counties across the DFW metroplex. That includes the counties of Collin, Dallas, Denton, Ellis, Hunt, Johnson, Kaufman, Parker, Rockwall, Tarrant and Wise.

In conclusion, the 2022 FHA and conforming loan limits for the Dallas-Fort Worth area, along with the revised jumbo loan threshold.

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