A pricier home

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A jumbo mortgage is a plus-size home loan weighing in at a dollar amount above what are called the conforming loan limits. A jumbo loan will typically come with more demanding requirements than a smaller, conforming mortgage.

The jumbo loan threshold is $424,100 in most of the United States, though in the highest-cost areas loans have to go over $636,150 to reach jumbo territory.

The geography of jumbo loans

There are 3,143 counties in the United States (counting Alaska’s boroughs, Louisiana’s parishes and the District of Columbia as counties, and excluding Guam, the Virgin Islands and Puerto Rico). Here’s the jumbo loan breakdown for 2017:

  • In some 93 percent of U.S. counties, a jumbo loan is defined as a mortgage of more than $424,100.
  • In about 3 percent of counties, a jumbo loan is a mortgage over $636,150. These are the highest-cost housing markets, including Los Angeles, New York City and San Francisco.
  • In around 4 percent of counties, jumbo loans start somewhere between $424,100 and $636,150. These housing markets have higher prices, but not as high as, say, Los Angeles. An example is Denver County, Colorado, where jumbo mortgages are loans higher than $493,350.
  • Four of Hawaii’s five counties have jumbo loan thresholds beyond $636,150 — as high as $721,050.

Qualifying for a jumbo mortgage

Unlike with a conforming mortgage, the underwriting process for a jumbo mortgage may require two appraisals instead of just one.

When shopping for a jumbo loan, you’ll find that they generally require higher down payments. Depending on the lender, the minimum down payment could be 15 percent, 20 percent or 30 percent for your home purchase.

Many jumbo lenders require a credit score of 700 or higher, a debt-to-income ratio of 43 percent or less, and six to 12 months’ worth of reserves in your bank account.

Conforming loan limits are set by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy mortgages from lenders.

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