Fannie Mae and Freddie Mac raised their respective conforming loan limit to $484,350 – January 1, 2019. Jumbo loan minimums in turn also increased to reflect the 2019 Conforming Loan Limits
The protocol was established in 2008 when the Housing and Economic Recovery Act of 2008 was put into place. Home values had fallen dramatically in recent months leading up to the move and HERA kept loan limits from falling further. Each year, the Federal Housing Finance Agency, or FHFA pulls home price data from the previous 3rd quarter and makes adjustments as needed.
There are higher conforming loan limits in areas where the median home value exceeds 150% of the conforming limit of $484,350. These ‘high cost” in California, Florida, Colorado, Massachusetts, DC, etc provide borrowers with slightly lower rates compared to a jumbo loan where the loan amount is greater than $726,525.
That’s the minimum for a jumbo loan but what is the maximum? Lenders who issue jumbo mortgages have the ability to establish their own internal lending guidelines and that includes setting a maximum jumbo loan amount. An individual lender might have a Jumbo loan amount cap at $1 or 2.0 million with a 5% down payment or even higher with a larger 10% down payment. It’s up to the lender to make these internal guidelines and not Fannie Mae or Freddie Mac.
Learn more about Jumbo Mortgage Basics here.
There are jumbo loan programs as high as $5 million but as loan amounts exceed this number the number of available jumbo loans shrinks. Instead, these ultra-high end homes typically obtain private financing from a bank. Such loans are for a relatively short time and not for an extended term such as 30 years. Hybrid loans are more common in this price range rather than a loan amount closer to $1 million. Home buyers who take out these super-jumbo mortgages often work with their own private banker who takes care of most facets of a high net worth individual’s assets.
Many private banks can put together a loan program it wants and can employ any sort of lending requirement as long as it’s not discriminatory to any protected class and applied to all jumbo loan applicants. A jumbo lender can require a 30% down payment for a transaction greater than $4 million and require a minimum credit score of 740 instead of 700. As long as the financing package is available to all applicants under the very same terms the super jumbo lender can craft most any loan type it desires. Learn more about all the Jumbo loan limits and down payment requirements on the Jumbo Purchase page. Call us or just submit the Quick Call Form for more information 7 days a week.