Jumbo Loan Threshold

Jumbo Loan Threshold:

What is a Jumbo Loan Threshold?

To fully understand what a Jumbo Loan Threshold is, the knowledge of what makes a Jumbo Loan is invaluable. In most area’s of the continental United States there are two basic categories, among many, that help distinguish loans from each other. These sections are conforming loan and non conforming loan. If a loan is seen as purchasable by the government agencies of Freddie Mac or Fannie Mae then it is a conforming loan as it must stay under the limit imposed for that year; which is $417,000 (as of 11/2015) for most one family unit homes in area’s not deemed high cost. This sum has been the ceiling since 2007 though there are areas that are deemed to be high cost area’s and therefore have their limit increased to accommodate the jump in pricing. So far the high cost areas are in :

  • Alaska
  • California
  • Colorado
  • Hawaii
  • Massachusetts
  • Maryland
  • New Hampshire
  • Tennessee
  • Washington

For a more concise graph issued by the Federal Housing Finance Agency, please check the link below:

http://www.fhfa.gov/DataTools/Downloads/Documents/Conforming-Loan-Limits/Counties_with_increases_cy2015.pdf

So the Jumbo Loan Threshold has its limit set where the government backed loans wont cover the amount because of the size of the sum. After this limiter is established the next limit is how high can the Jumbo Loan Threshold reach? This is decided individually among each lender who considers the loan. Some lenders might have further classifications for the jumbo loan itself, earning it titles such as super jumbo loan, or maximum jumbo loan. These titles and their qualifications are up too debate between each lender, and what may be a super jumbo loan for one lender may be a normal jumbo loan to the next.

In conclusion, a Jumbo Loan Threshold is determined by a loan’s size and whether or not it conforms with both the lenders definition of a Jumbo Loan, and falls under the “non conforming” side of the Freddie Mac and Fannie Mae analyzation.