What is considered a jumbo loan in Texas 2022?

5 key highlights from this report:

• Texas conforming loan limits were increased for 2022.
• The revised limit for a single-family (one-unit) property is $647,200.
• Anything above that amount would be considered a jumbo loan in Texas.
• Housing officials made these changes due to major home-price growth.
• Austin home prices could soon surpass the conforming loan limit.

On December 1, 2021, the Federal Housing Finance Agency (FHFA) announced it would be raising the conforming loan limits for most counties across the country. All counties in the state of Texas got an increase as well. In fact, the 2022 conforming loan limit for Texas rose by nearly $100,000 over the 2021 cap.

A “conforming” loan is one that can be sold to Freddie Mac or Fannie Mae, the government-sponsored enterprises (GSEs) that buy loans from lenders. The government maintains size restrictions for the mortgage products that can be sold to Fannie and Freddie. These are known as “conforming loan limits.”

Here are the 2022 conforming loan limits for all Texas counties:

Note: In this table, a “1-unit” property would be a regular single-family home. A “2-unit” property is a duplex with two separate residences. And so on. For a typical home buyer in Texas, the 1-unit column applies.

The increase in loan limits from 2021 to 2022 was the largest we’ve ever seen — and possibly the biggest ever. As mentioned above, the 2022 conforming loan limit for Texas counties ($647,200) is nearly $100,000 higher than the 2021 cap of $548,250.

This is a direct result of the unprecedented home-price growth that occurred over the past year. House values in Texas and elsewhere across the country have skyrocketed this year. That trend prompted housing officials to make big increases in the conforming loan limits for Texas and all other U.S. states.

Most of Texas Is Still Relatively Affordable

As of December 2021, the statewide median home value in the Lone Star State was around $267,523. That’s well below the 2022 Texas conforming loan limit of $647,200. This means that most home buyers across the state should be able to find a suitable property within the conforming loan range.

By comparison, the national median home value was around $312,000 in December. So Texas is still a relatively affordable state, in terms of housing costs.

Of course, some Texas cities and metro areas have much higher home prices when compared to the statewide average. (We’re looking at you, Austin!)

So, what’s a home buyer to do in these higher-price areas? What if you need to borrow more than $647,200? In those cases, you would have to venture into “jumbo” territory. So let’s talk about that next…

Using a ‘Jumbo’ Mortgage to Buy a Home in Texas

The 2022 conforming loan limit for all Texas counties will be set at $647,200. That means the jumbo loan threshold for Texas is anything above $647,200.

Borrowers with sufficient income can qualify for jumbo mortgage financing that exceeds their county’s loan limits. But you can expect a more thorough review from the lender.

Generally speaking, Texas jumbo mortgage loans require larger down payments and better credit scores than their smaller “conforming” counterparts. That’s because the larger amount brings more risk to the lender.

We’ve learned that many home buyers and mortgage shoppers (and even some bloggers) use the phrase “jumbo loan limits.” But that phrase is a misnomer.

Technically speaking, there isn’t a jumbo loan limit for Texas. There’s a conforming limit, as determined by the Federal Housing Finance Agency. And anything above that amount is considered a jumbo mortgage. But there’s not really an industrywide jumbo loan limit.

Some lenders offer jumbo products up to $1 million. Others might go well above that amount, for well-qualified borrowers. It varies. So it’s probably more accurate to use the phrase “jumbo loan threshold.” And in 2022, that threshold starts above $647,200.

Our guess is that jumbo mortgages in Texas will become much more common in 2022. That’s especially true for the Austin area, which has experienced tremendous home-price growth over the past 15 months or so.

Austin Could Soon Surpass Its Loan Limit

Here’s a prediction. In the Austin area, jumbo loans will become more and more common in the months ahead.

Home prices in the Austin metro area have risen by a ridiculous amount over the past year or so. The median home value in this market has already exceeded the 2021 conforming loan limit — and it will soon surpass the higher 2022 limit as well.

In December, the Zillow.com website stated:

“The typical home value of homes in Austin is $606,319 … values have gone up 40.6% over the past year.”

This means that the average house price in the city has already risen above the 2021 conforming loan limit. Looking forward, Zillow made the following prediction for the broader metro area:

“Austin-Round Rock Metro home values have gone up 44.3% over the past year and Zillow predicts they will rise 20.6% in the next year.”

At that pace, the median house price in the Austin metro area could surpass the revised 2022 conforming loan limit within the next six months or so. It’s no wonder the capital city is grappling with affordability issues.

According to a Zillow report published back in August: “Austin is expected to fall down affordability ranks further by December [2021] to become the least-affordable metro for home buyers outside California.”

So there you have it, a review of Texas conforming loan limits for 2022 and how they relate to home prices.

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