2024 Jumbo Loan Limits and Requirements
Are you considering buying a home in 2024 with a price tag that’s above average? If so, you might need a jumbo loan.
With rising property values in areas like California, Hawaii, and New York, jumbo loans help make high-value properties more accessible by allowing you to borrow beyond the usual conforming loan limit set by the Federal Housing Finance Agency (FHFA).
In this guide, we’ll break down the key jumbo loan requirements, limits, and options for 2024, helping you determine if a jumbo loan is right for your real estate goals.
And if you’re ready to explore your jumbo loan options, check out Rate’s Jumbo Loans for flexible solutions tailored to high-value properties.
What Is a Jumbo Loan?
A jumbo loan is a mortgage that exceeds the FHFA’s loan limits for conventional loans.
This means it doesn’t qualify for purchase by Fannie Mae or Freddie Mac, which support most conventional mortgages in the U.S.
Jumbo loans come in when you’re looking at a high-cost property or want more borrowing power than what a conventional mortgage allows.
This kind of loan is especially popular in high-cost areas like Los Angeles, San Francisco, and New York, where real estate prices push beyond standard limits.
For many buyers, a jumbo loan enables access to substantial financing without the restrictions of a conventional mortgage, simplifying the path to homeownership in today’s competitive markets.
2024 Jumbo Loan Limits
Each year, the FHFA sets conforming loan limits, or the maximum amount available through conventional mortgages.
In 2024, the conforming loan limit is $766,550 in most areas of the country but can go as high as $1,089,300 in high-cost regions like California, Alaska, and Hawaii. If you’re seeking more than these limits, a jumbo loan may be necessary.
What Are Jumbo Loan Limits?
Jumbo loan limits refer to the maximum amounts available for properties that exceed the conforming loan limits, helping buyers to finance high-value homes that require more financing.
Why Are Jumbo Loan Limits Necessary?
Jumbo loan limits help lenders manage the increased risk associated with high-value properties. As larger loans usually have more risk, these limits ensure borrowers can handle the financial responsibility.
Jumbo Loan Limits by State/County (How to Find Them)
To determine if you need a jumbo loan, check your area’s loan limits. The FHFA sets these limits by state and county, and in high-cost regions, they can vary significantly.
You can check loan limits on the FHFA website or through a mortgage lender. With annual updates, you’ll find these limits helpful to better understand your financing needs and ensure you meet the criteria for larger loan amounts.
What is the VA Jumbo Loan Limit for 2024?
For 2024, the VA loan limit for eligible veterans with reduced VA loan entitlement is generally set at $766,550 for most counties and can go as high as $1,149,825 in high-cost counties, aligning with the conforming loan limit established by the Federal Housing Finance Agency (FHFA).
However, if you have full entitlement, you do not have a loan limit! These limits ensure that veterans and service members can access enough financing for high-value properties when needed.
Jumbo Loan Requirements
Due to their larger size, jumbo loans often come with stricter qualifications than standard mortgages. Here’s what to know if you’re considering a jumbo mortgage:
Who Is Eligible for a Jumbo Loan?
Borrowers typically need a high credit score (usually above 700) and a low debt-to-income (DTI) ratio, ideally 43% or lower.
Lenders also look for steady income and cash reserves to ensure borrowers can meet the larger monthly payments.
Do Jumbo Loans Require a 20% Down Payment?
Although a 20% down payment option is common, some lenders offer options with less. For example, Rate offers jumbo loans with lower down payments depending on borrower qualifications.
How Much Down Payment Is Needed for a Jumbo Loan?
Generally, down payment options on a jumbo loan range from 10% to 30%, depending on factors like credit score, loan amount, and loan term. A strong down payment reduces lender risk, which can benefit you when negotiating loan rates.
Typical Jumbo Loan Down Payment Amounts
While requirements vary, expect to pay between 10% and 20% down. Higher credit scores and cash reserves can sometimes secure lower down payment amounts, as they improve eligibility for competitive loan terms.
Income and Credit Score Requirements
Jumbo loans generally require higher credit scores and substantial income to qualify. Lenders prefer borrowers with a DTI around 43% to handle the monthly payments and closing costs associated with larger loans.
Do Jumbo Loans Require Mortgage Insurance?
Typically, jumbo loans don’t require mortgage insurance, especially if your down payment meets lender requirements. This is a plus for borrowers because it can reduce monthly expenses.
Jumbo Loan Interest Rates
Interest rates on jumbo loans are usually a bit higher than on conventional loans, partly due to the larger loan size and the added risk lenders face. Here’s a closer look at what impacts these rates and why they can be different from standard mortgage options.
How Are Jumbo Mortgage Rates Set?
Rates for jumbo mortgages are typically higher than conventional loans because of the risk to lenders. Credit score, down payment, and economic factors all influence how lenders set these loan rates.
Jumbo loan rates are influenced by credit scores, loan-to-value ratios (LTV), and the borrower’s debt-to-income ratio (DTI), which helps lenders assess the borrower’s financial stability.
Properties in high-cost areas like San Francisco or Hawaii, often with larger loan amounts, also tend to have slightly higher interest rates.
These factors make jumbo loan underwriting more stringent to ensure homeowners can manage the larger mortgage payments over time.
Factors That Impact Jumbo Loan Rates
Mortgage lenders evaluate multiple factors when setting jumbo loan rates to make sure borrowers are financially qualified. Below are a few key considerations:
Economic Conditions and Market Trends
Jumbo rates can vary with economic conditions. In a thriving market, for instance, rates might be lower as lenders face reduced risks. But in uncertain times, rates could rise due to increased caution in loan origination.
Borrower’s Creditworthiness
Lenders look closely at credit scores and financial history. A higher credit score can secure lower interest rates, potentially saving homeowners a substantial amount in monthly mortgage payments.
Loan-to-Value (LTV) Ratio
With a higher down payment, you may secure a better rate, as lenders prefer a lower LTV ratio. A substantial upfront payment can also help reduce monthly payments, which is especially beneficial for unit properties or investment properties.
Property Type and Location
The type and location of the property significantly impact rates. Primary residences generally receive better rates compared to investment properties.
Areas like San Francisco and Hawaii may also see unique adjustments based on local market dynamics and home values.
Are Jumbo Loans Only for Primary Residences?
No, jumbo loans can finance primary residences, investment properties, and even unit properties. However, terms may vary, with higher interest rates typically applying to non-primary homes.
How to Shop for a Jumbo Loan
If you’re considering a jumbo loan for a high-cost property, understanding the limits and requirements is essential to getting the best terms.
Rate’s jumbo loans can help simplify this process with competitive options tailored to your needs, ensuring your jumbo loan journey is both smooth and rewarding.
Take advantage of Rate’s Jumbo loans expertise to find flexible jumbo loan solutions that suit your goals and bring homeownership within reach.
Guaranteed Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture, or any other government agency.