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Jumbo
Loans that exceed the mortgage limit of the region
Jumbo Loans
Fannie Mae and Freddie Mac both have limits on the value of homes that these associations protect. Homebuyers who can afford to take out a loan on homes with a value higher than the conforming loan limits can utilize jumbo loans to make their purchase.
Benefits of a jumbo loan
The only benefit of a jumbo loan is that it allows you to purchase a home that exceeds the mortgage limit of the region where that home is located in the United States.
If a borrower needs to borrow more than that mortgage limit, then their only option is to apply for a jumbo loan, which is not backed by the Federal Housing Finance Agency.
Who qualifies for a jumbo loan?
Because there is no federal backing for jumbo loans, there is a much more comprehensive set of requirements for a borrower to get one. Here are the criteria that most lenders require for a borrower to qualify for a jumbo loan:
• A borrower must have a credit score of at least 700.
• A borrower must have a debt-to-income ratio of at least 43% or less (usually less).
• Income requirements depend on the total value of the home being purchased, but only high-income individuals are usually considered for jumbo loans.
United States loan limits
The United States has over 3,000 counties or county-equivalent jurisdictions. In any given year, roughly 100 to 200 of them qualify for high-cost limit values that exceed the baseline limit value.
• The vast majority of United States counties have a loan limit of $766,550 as of 2024.
• In the more expensive CA, DC, MD and VA -area counties, for example, the single-family loan limit has increased to $1,149,825 for 2024.
• States and territories that are not a part of the continental United States, such as Hawaii, Guam, and Alaska, (among others) have a maximum loan limit of up to $766,550. For high-cost areas, and also for Alaska, Guam, Hawaii and the U.S. Virgin Islands, the loan limit for a one-unit home increased to $1,149,825 for 2024.
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