What Is the Jumbo Loan Amount?
Jumbo loans are available for loan amounts that exceed the conforming loan limit. Find out more about jumbo loan amounts and how to qualify for a jumbo loan.
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Jumbo Loan Basics
A jumbo loan is a loan that exceeds the conforming loan limit set by the Federal Housing Finance Agency (FHFA). In most U.S. counties, the conforming loan limit is $484,350. However, in high-cost areas, the limit can be as high as $726,525. Jumbo loans are typically used to finance expensive homes, investment properties, or to refinance an existing loan.
What is a jumbo loan?
A jumbo loan, also known as a non-conforming loan, is a loan that doesn’t conform to the guidelines of Fannie Mae and Freddie Mac. Jumbo loans are typically used to finance larger homes and luxury properties. The maximum loan amount for a conforming loan is $510,400. For a jumbo loan, you’ll typically need a credit score of 680 or higher and a debt-to-income ratio below 45 percent.
What is the jumbo loan amount?
A jumbo loan is a type of mortgage loan that exceeds the typical lending limits for Fannie Mae and Freddie Mac, the two government-sponsored entities that buy and securitize conventional mortgages. Jumbo loans are typically used to finance luxury properties and homes in high-cost areas.
The maximum loan amount for a conventional mortgage is generally $510,400, though it can vary depending on the loan program and the borrower’s location. For example, the loan limit for a single-family home in Sonoma County, California is $765,600, while in Eagle County, Colorado it’s $593,000. Anything above these limits is considered a jumbo loan.
Because jumbo loans are not backed by government entities like Fannie Mae or Freddie Mac, they typically come with higher interest rates than conventional mortgages. Lenders also often require higher down payments for jumbo loans – typically 20% or more – and stricter credit and income requirements.
What are the benefits of a jumbo loan?
A jumbo loan is a type of mortgage designed to finance luxury homes or those in highly competitive real estate markets. Limits for these loans vary by location but it typically refers to a mortgage that exceeds $484,350.
Jumbo loans come with both benefits and challenges. On the plus side, they allow buyers to purchase expensive homes without having to get a second mortgage. They also tend to have lower interest rates than similar non-conforming loans.
On the downside, jumbo loans are not backed by government agencies and thus can be harder to qualify for. They also typically require higher credit scores and down payments than conforming mortgages.
Jumbo Loan Amount
The jumbo loan amount is a loan that is above the conforming loan limit. This limit is set by the Federal Housing Finance Agency (FHFA) and may change from year to year. In 2020, the conforming loan limit is $510,400 in most counties across the U.S. However, in high-cost areas, the limit is $765,600.
How is the jumbo loan amount calculated?
The jumbo loan amount is calculated by taking the price of the home and subtracting the amount of the down payment. If the down payment is less than 20 percent, then private mortgage insurance (PMI) will be required. The maximum loan amount for a conventional loan is $484,350 in most counties, as of 2018. Higher priced areas, like Hawaii and Alaska, have a higher loan limit of $726,525.
To calculate the jumbo loan amount, you will need to know the price of the home and the amount of the down payment. The down payment can be any amount up to 20 percent of the purchase price. If you are making a down payment of less than 20 percent, then you will need to pay for private mortgage insurance (PMI).
The maximum loan amount for a conventional jumbo loan is $484,350 in most counties as of 2018. Higher priced areas, like Hawaii and Alaska have a higher loan limit of $726,525.
What factors affect the jumbo loan amount?
Your jumbo loan amount is not just based on the value of your home, but also on your credit score, debt-to-income ratio, employment history, and other financial factors. Lenders will also consider the type of property you are buying (primary residence, second home, or investment property), as well as your down payment amount.
Jumbo Loan Benefits
A jumbo loan is a mortgage that has a loan amount that is greater than the conforming loan limit. Jumbo loans offer borrowers a number of benefits, including:
Lower interest rates
For homebuyers looking to make a lower down payment, the Jumbo Loan amount may be the way to go. Jumbo Loan interest rates are typically lower than conventional loans, and you can use a Jumbo Loan for a primary residence, second home, or investment property. In most counties, the loan limit for a Jumbo Loan is $625,500.
No private mortgage insurance
When you hear the term “jumbo loan,” you might think it refers to the size of the loan. But in fact, a jumbo loan is simply a mortgage loan that exceeds the conforming loan limit for your area. For most of the United States, that limit is $729,750.
The advantages of a jumbo loan are simple – you can borrow more money to buy a high-priced home. And because there is no private mortgage insurance (PMI) required with a jumbo loan, you can enjoy even greater savings over the life of your loan.
If you are planning to purchase a home in an area with high real estate prices, or if you need to borrow more than $729,750 to finance your home purchase, a jumbo loan may be right for you.
Access to more loan programs
Jumbo loan amounts are not capped like conventional loans which is why they are called non-conforming loans. This means that borrowers have access to more loan programs because there are no restrictions on the amount that can be borrowed. Think of a jumbo loan as a way to break out of the conforming loan box.
The most popular programs for jumbo loans are conventional loans, FHA loans and VA loans. Borrowers who don’t qualify for these programs often turn to portfolio lenders who offer jumbo loans.
