When shopping for a mortgage, you may have heard the phrase “jumbo loan.” What is it? And do you need one?
In most locations, conventional mortgages have loan limits set in place by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages from lenders, pool them together, and sell them as mortgage-backed securities to investors. Typically, the loan limit is set at $484,350. However, if you’re in a more expensive housing area or a hot market, that limit may be higher. For example, in Napa County, CA, the loan limit is currently $726,525. If you need a mortgage greater than that amount, you’ll need to apply for a jumbo loan.
Realize this relates to the mortgage amount, not the home’s sale price. So if you’re buying a home in Napa County for $1 million, and making a down payment of $300,000, then your mortgage amount is $700,000, which is below the conventional loan limit. In this case, there’s no need for a jumbo loan. However, if your down payment were $200,000, then your loan amount would be $800,000, and you would need to apply for a jumbo loan.
Have Questions, Reach out to me for more information.
Call me at (707) 254-8891
Hilda Hensley Branch Manager – Mortgage Advisor
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Benchmark Mortgage
Ark-La-Tex Financial Services, LLC NMLS id 2143
