Jumbo loans are mortgages that exceed the conforming loan limits set by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. These loan limits vary by county and are determined based on the median home prices in the area. These GSEs establish maximum loan limits that determine the size of loans they can purchase and guarantee. When a loan exceeds these limits, it is considered a jumbo loan.

• County loan limits play a crucial role in determining whether a loan falls into the category of a Jumbo loan or a conforming loan. When the loan amount exceeds the conforming loan limit for a particular county, it is considered a Jumbo loan.

• Jumbo loans generally have different underwriting requirements and may have stricter eligibility criteria compared to conforming loans.

• Jumbo loans usually have higher interest rates compared to conforming loans due to the increased risk associated with larger loan amounts. The interest rates offered on Jumbo loans will vary based on factors such as creditworthiness, loan-to-value ratio, and prevailing market conditions.

• Jumbo loans typically require larger down payments compared to conforming loans. Lenders may require borrowers to put down 20% or more of the home’s purchase price to mitigate the higher risk associated with Jumbo loans.

• When the loan amount exceeds the conforming loan limit for a county, it becomes a jumbo loan. Jumbo loans generally have stricter qualification criteria, higher interest rates, and larger down payment requirements compared to conforming loans. Lenders often assume more risk with jumbo loans because they are not eligible for purchase or guarantee by the GSEs. As a result, lenders may require borrowers to have a stronger credit profile and a higher income to qualify for a jumbo loan.

• County loan limits can vary significantly across different areas and in high-cost regions such as major cities or affluent areas, the county loan limits tend to be higher, which allows larger loan amounts to still fall within the conforming loan limit. Alternatively, in areas with lower median home prices the county loan limits may be lower; resulting in a larger number of loans exceeding the limit and requiring jumbo financing.

• The current conforming loan limit for all counties throughout the country is $726,500 for a one  unit property.  For homes that are located in what has been determined to be a high balance region, the loan limits will vary depending upon the county.

• In regions where high balance limits don’t apply, any loan amount over $726,200 will be considered a Jumbo Loan. In a county which is considered to be a high balance region, a Jumbo Loan will then be any loan size above the high balance limit.

County loan limits have a direct impact on jumbo loans. Staying within the conforming loan limit offers certain advantages, such as lower interest rates, while exceeding the limit leads to jumbo loan requirements, including higher rates and stricter eligibility criteria.

It is always best to be acquainted with the County Limit of the area in which you are interested in purchasing your new home.