Homes aren’t one-size-fits-all, and neither are mortgages. Just like families may need more space as they grow, a larger property may require a heftier mortgage than a smaller home with a lower price tag. A jumbo loan could fit you like a glove If you’re buying a costlier home and need to borrow more than the conforming loan limits allow.
Whether you’re looking to purchase an upscale property or simply one in an area with a high cost of living, here’s what you need to know about the 2023 jumbo loan limits.
What are jumbo loans
Essentially, a jumbo loanis a mortgage that exceeds baseline amounts set by Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) guidelines. Since jumbo loans do not have upper limits established by the agencies mentioned, it’s up to your lender to determine the ceiling amount for jumbo loan limits.
Ajumbo mortgage can be used to finance primary homes, vacation homes, and investment properties. Like a standard mortgage loan, jumbo loans can also be refinanced to adjust term length, lower the rate, or (for primary residences) take out cash.
Minimum and maximum loan amounts
If you are wondering whether you’ll need a jumbo loan, you need to consider the limits set for conforming loans. The agency-set maximum limits for these loans provide a baseline for jumbo loans.
Most parts of the country have one maximum loan amount for conforming loans. In some high-cost areas, such as Washington D.C. and certain California counties, the threshold for the maximum conforming loan is higher.
For 2023, the Federal Housing Finance Agency (FHFA) raised the maximum conforming loan limit for a single-family property from $647,200 (in 2022) to $726,200. In certain high-cost areas, the ceiling for conforming mortgage limits is 150% of that limit, or $1,089,300 for 2023.
See our county-by-county chart below, which highlights all counties with 2023 conforming loan limits above the standard $726,200.
Keep in mind, the Federal Housing Finance Agency may increase conforming loan limits again for 2024. If you are planning on taking out a mortgage loan in 2024, check back here for updates on loan limits.
Why do conforming loans have limits?
The Federal Housing Finance Agency sets upper limits for conforming loans each year by county. Anything above those upper limits is considered a jumbo loan and is non-conforming, meaning it exceeds the size of a mortgage that government- ponsored enterprises Freddie Mac or Fannie Mae will buy or guarantee. Because jumbo loans cannot be sold to either of these enterprises, lenders take on more risk.
Jumbo loan requirements
Because a jumbo loan means you’re taking out a larger-than- ypical mortgage, lenders impose stricter jumbo loan requirements than they might for a traditional loan. They will examine several aspects of your financial health to assess whether you can afford a bigger mortgage and if you are likely to pay it back on schedule.
Lenders will look at the following benchmarks:
Credit score: The minimum credit score required for a jumbo loan is typically 700.
Debt-to-income (DTI) ratio: Lenders look for a lowDTI ratio, usually no higher than 43 percent.
Down payment minimum: While a 20% down payment may not be required for conforming loans, some lenders require 20% (or more) for jumbo loans.
Lenders will also look for a reliable, steady income. This is because they want to know you can afford the higher monthly payments and often higher interest rates that come with jumbo loans as opposed to traditional mortgages.
What are jumbo loan rates?
Like with most loans, you have to pay interest in exchange for the jumbo mortgage amount lent by your financing company. Your rate may be fixed or adjustable, depending on the terms and mortgage type you choose. Rates can vary and are influenced by individual factors and Federal Reserve benchmarks.
Interest rates for jumbo loans change daily. You can visit Bankrate to view current jumbo loan interest rates.
Jumbo loan limits by state?
The chart below shows 2023 jumbo loan limits in the U.S. counties and territories with conforming loan limits above the standard $726,200 for a single-unit property.
2023 jumbo loans limit by area
Contra Costa County
Los Angeles County
San Benito County
San Francisco County
San Mateo County
Santa Clara County
Santa Cruz County
San Diego County
San Luis Obispo County
Santa Barbara County
El Dorado County
San Miguel County
Clear Creek County
District Of Columbia
Prince George's County
New York County
Box Elder County
U.S. Virgin Islands
St. Croix Island
St. John Island
St. Thomas Island
Falls Church City
Manassas Park City
Prince William County
How to shop for a jumbo loan
Now that you know more about jumbo loans and their limits for 2023, you can begin to determine if it’s the right mortgage choice for you. Whether you already know you’ll need a jumbo mortgage or you’re still in the process of searching for a property, you’ll want to shop around for the right jumbo loan as well.
Be sure to research multiple lenders to compare factors including loan requirements and interest rates. You’ll also want to examine the loan terms that are offered to ensure you find a lender that fits your needs and timeline. It’s typically a good idea to get mortgage pre- approvalor apply to at least three lenders to receive multiple loan estimates so you can be sure you are ready to buy when it’s time for closing.
Is a jumbo loan right for you?
If you are in the market for a bigger home, you might also be in the market for a jumbo mortgage. So, as you conduct your home search, keep an eye on current jumbo loan limits as they can change annually. Talking to a jumbo loan expert can help you decide if you should go big with your mortgage in order to go home.