Earlier this year, jumbo loan limits increased to $548,250 in most of the U.S. and up to $822,275 in high-cost areas. Why does this matter? Jumbo loan limits put mortgages in two distinct buckets: conforming home loans and non-conforming home loans.
Depending on your homeownership goals, you might want to shop within conforming limits so you can qualify for the lowest rate possible and enjoy less strict criteria to qualify. Historically, conforming loans offer the lowest rates and the most options for homebuyers.
On the flipside, jumbo loans offer freedom and opportunity for homebuyers, especially in areas where the cost of homes is substantially higher.
The truth is, understanding jumbo loan limits can help you save money on your mortgage.
Jumbo Loans Explained
A jumbo mortgage is a home loan that exceeds the standard conforming loan limits set by Freddie Mac and Fannie Mae. For this reason, jumbo loans are also referred to as non-conforming loans since they don’t “conform” to the standard loan limits. (Conforming loans are government-backed and historically offer lower mortgage rates and flexible guidelines to qualify.)
Jumbo loans are not government-backed and are therefore considered riskier loans. As a result, mortgage lenders set stricter requirements when they underwrite jumbo loans. Since most lenders consider jumbo loans to be riskier, mortgage rates are often slightly higher.
What are the Jumbo Loan Limits for 2021?
The jumbo loan limit for 2021 is $548,250 for most of the U.S. and $822,375 for specific counties where living costs are higher.
- Single-Family Homes: $548,250 – $822,375
Why this matters:
- A home loan for less than $548,250 qualifies as a conforming loan across the U.S. If you’re looking to qualify for a conforming loan to get the lowest rate on your mortgage, you can shop with confidence once you know the jumbo loan limits.
- In high-cost areas where the threshold is higher, you would be able to apply for a home loan up to $822,375 and still qualify for a conforming loan.
- For homes above conforming limits, jumbo mortgages offer a flexible path to homeownership and freedom to shop for a dream home without purchase limits.
How to Qualify for a Jumbo Loan
To qualify for a jumbo loan, each lender has unique criteria. Since jumbo mortgages aren’t backed by Fannie Mae or Freddie Mac, lenders consider jumbo loans a higher risk. As a result, lenders typically have stricter requirements to determine whether you can afford higher mortgage payments and pay on time.
- High credit score or 680+
- Cash reserves
- Large down payment*
- Low debt-to-income ratio
* Down payments upwards of 20% are typical, though some lenders may approve a jumbo loan with only 5% down payment. Talk to a qualified mortgage advisor to find out more.
Lenders may charge additional fees to process the loan, so make sure to compare origination fees and other negotiable closing costs. Working with an experienced mortgage broker can save you a lot of money and get you a better mortgage. Mortgage brokers work with multiple lenders, and they can shop around for the best rate and negotiate on your behalf.
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The current jumbo loan limits are set at $548,250 for most of the U.S., with a higher limit set for $822,375 in specific counties where living costs are higher. For homebuyers looking to qualify for a government-backed home loan, check with your mortgage advisor to determine the jumbo loan limits in your area.
If you’re shopping for a higher-priced home that exceeds conforming loan limits, jumbo loans offer a more flexible path to homeownership. Mortgage lenders set different maximum limits for jumbo loans, and it’s wise to shop around for the best home loan. Lenders require down payments between 5-30% and have different criteria for debt-to-income ratios and credit scores.
Talk to an experienced mortgage broker. Every homebuyer has a different financial picture, and you deserve a mortgage that will help you reach financial freedom.
If you’re a homebuyer shopping around for the best jumbo loan rates, we can help. Gain access to the best lenders by working with an experienced mortgage broker. We partner with mortgage lenders throughout California, Oregon, Washington and Colorado. We can help you qualify for your best mortgage with the lowest rate based on your homeownership goals. Give us a call to get started.