HECM Loan Limit Increased to $970,800 in 2022

HECM Loan Limit Increased to $970,800 in 2022

The Federal Housing Administration will increase the maximum claim amount for Home Equity Conversion Mortgages in calendar year 2022 from $822,375 to $970,800 effective for case numbers assigned on or after January 1.

This new maximum claim amount is also applicable to Freddie Mac’s special exception areas: Alaska, Hawaii, Guam, and the Virgin Islands.

Details were published in Mortgagee Letter 2021-29 and will be included in a future Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1) release.

We have seen very aggressive home price appreciation over the past year, and NRMLA welcomes HUD’s recent adjustment to the HECM national lending limit in recognition of the current state of the nation’s housing market. Senior homeowners housing wealth exceeds $9.5 trillion, and this housing wealth should be considered with other financial assets when developing a comprehensive retirement plan. The adjustment to the HECM national lending limits will better enable senior homeowners to strategically tap accumulated home equity as part of their retirement planning.

It is important to note that the single-national loan limit for HECM (as opposed to the area-by-area limits,) is something that exists because of NRMLA’s advocacy efforts. NRMLA successfully persuaded Congress, and key HUD officials, that the area limits used for forward mortgages did not really make sense for HECMs.

Area-by-area limits are to empower consumers to buy an equivalent home wherever they are. Such a home costs a lot less in St. Louis than in Los Angeles, or in Buffalo, NY than the NYC metro area.

On the other hand, a HECM is used to help a homeowner draw cash from their accumulated equity to age in place. The costs of aging, prescription drugs, durable medical equipment, adapting a home with stair glides, etc. do not differ regionally. So a homeowner with a higher value property in an area with a low FHA loan limit should not be penalized by only being able to borrow based on the forward mortgage loan limit.