Negotiating + Financing

NYC buyers can tap lower-cost mortgages with new Freddie and Fannie $1 million loan limit in 2022

By Jennifer White Karp | November 19, 2021 - 2:30PM 

The new conforming loan ceiling will open up credit opportunities to NYC buyers who didn't meet jumbo financing guidelines in the past.


New York City buyers don’t typically get to take advantage of the lower rates, smaller down payments, and ease of borrowing associated with conforming loans. But that’s likely to change with new loan limits going into effect soon.

Fannie Mae and Freddie Mac, the government-backed entities that buy loans from banks, are expected to announce a new conforming loan ceiling of about $1 million in high-cost markets like New York City, according to the Wall Street Journal. The current loan limit is $822,375.

The move will give buyers some breathing room, says Brittney Baldwin, vice president and loan officer at National Cooperative Bank (a Brick Underground sponsor).

“With an increase to the conforming and high-cost loan limits by Fannie Mae and Freddie Mac, this could open up potential credit opportunities to buyers who before may not have met jumbo financing criteria in the past,” Baldwin says.

That’s because many buyers have traditionally needed jumbo loans in order to afford NYC’s pricey properties—but these loans are tougher to qualify for. Most banks require as much as six months of mortgage payments in your bank account, versus the typical two months' worth for a conforming loan.

But with a higher ceiling for conforming loans (essentially the loans that can be sold to Fannie and Freddie) more NYC buyers can tap lower-cost borrowing.

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Melissa Cohn, regional vice president at William Raveis Mortgage, points out that the exact amount for the new loan limit is not yet known—it will be shared on November 30th and go into effect at the beginning of 2022—but regardless, an increase is “still good news for the NYC market.” 

And it is especially good news for New Yorkers who freelance or are self-employed and have been hoping to buy in the new year. This segment of the workforce likely saw their income take a dip during the pandemic in 2020.

“If someone is self-employed, with a confirming loan you can get a waiver and provide one year of tax returns,” Cohn explains. If 2021 was a good year—then that’s all you would have to show, unlike the two years’ worth of statements that are a must to qualify for a jumbo loan.

There are other advantages as well. With a conforming loan, you can get approved if your credit score in the 600 range (lenders for jumbo loans would want to see credit scores above 700)—and your debt-to-income ratio can be as high as 50 percent (but “not everyone wants to spend half their income on housing,” Cohn adds).

The new limit is a reflection of how different the market is in a place like NYC. Buyers in other parts of the U.S. may spend $1 million on a McMansion; but here in New York City, that “doesn’t necessary buy you luxury real estate. If you’re buying something that costs $900,000 here—you’re not buying a palace,” Cohn says.

“New Yorkers are usually not able to take advantage of confirming loans. Now they will be able to take advantage of buying opportunities for appropriate housing, not fancy,” she says.


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