Someone recently asked me what is a “jumbo loan” and what makes it different than getting a regular mortgage to buy a home, so here is my recap for American readers. A jumbo loan is not simply a big mortgage, but specifically a loan that exceeds what can be guaranteed by the federal agencies, Fannie Mae and Freddie Mac. For most areas, this has long been $417,000, but increased in 2017 to $424,000. Loans can be substantially more in expensive urban areas.
More and more home buyers need a jumbo loan in expensive urban area where home prices have long been pricey, going up, and have rebounded since the great recession. What this may mean for buyers who need a jumbo mortgage is that mortgage rates may be greater than a “conforming” loan and you may need a larger down payment and FICO score.
Here is a tip on how to avoid needing a jumbo loan. To avoid needing a jumbo loan, some buyers get the maximum conventional loan and cover the rest with a second mortgage or home equity line.
Bankrate.com has a nice lookup page to find the amount for any area: http://www.bankrate.com/finance/mortgages/new-jumbo-loan-limits-state.aspx