When you’re securing a loan for a particularly expensive house, a regular mortgage may not suffice. For 2023, if your required loan amount surpasses the $726,200 conforming loan limit set by the Federal Housing Finance Agency (FHFA) in most counties, then you’ll need to get a jumbo loan. In certain “high-cost areas” though, this limit may be set higher to account for higher home values.
Work with a financial advisor to build a long-term financial plan that accounts for mortgage payments.
Jumbo Loan Limits for 2023
A jumbo loan is a mortgage that exceeds the conforming loan limit set by the FHFA for a given area. The most common conforming loan limit for 2023 is $726,200, which means any mortgage that’s larger than that is a jumbo loan. Loans above these limits are not under the coverage of government entities Fannie Mae and Freddie Mac. That makes them inherently riskier than a conforming loan.
While the aforementioned $726,200 limit is generally seen as the standard for 2023, actual county-level limits can vary. These variations occur because of differing average home values, state lending limits and real estate market activity.
For instance, every county in Alaska and Hawaii has a $1,089,300 limit, which is the highest it can be. American territories like Guam and the U.S. Virgin Islands have the same limit.
Below is an overview of every U.S. state, county or territory that has a conforming loan limit above the $726,200 standard. If the place you’re looking to buy a home in isn’t below, its loan limit is $726,200.
|Areas With a Conforming Loan Limit Above $726,200|
|California||Alameda County, Contra Costa County, Los Angeles County, Marin County, Orange County, San Benito County, San Francisco County, San Mateo County, Santa Clara County, Santa Cruz County||$1,089,300|
|San Diego County||$977,500|
|San Luis Obispo County||$911,950|
|Santa Barbara County||$805,000|
|El Dorado County, Placer County, Sacramento County, Yolo County||$763,600|
|Pitkin County, Garfield County||$948,750|
|San Miguel County||$862,500|
|Park County, Jefferson County, Gilpin County, Elbert County, Douglas County, Denver County, Clear Creek County, Broomfield County, Arapahoe County, Adams County||$787,750|
|Blaine County, Camas County||$740,600|
|Maryland||Frederick County, Montgomery County, Prince George’s County, Charles County, Calvert County||$1,089,300|
|Massachusetts||Dukes County, Nantucket County||$1,089,300|
|Essex County, Middlesex County, Suffolk County, Norfolk County, Plymouth County||$828,000|
|New Hampshire||Rockingham County, Strafford County||$828,000|
|New Jersey||Ocean County, Monmouth County, Middlesex County, Somerset County, Hunterdon County, Morris County, Sussex County, Passaic County, Bergen County, Essex County, Union County, Hudson County||$1,089,300|
|New York||Putnam County, Westchester County, Rockland County, Bronx County, New York County, Kings County, Queens County, Nassau County, Suffolk County, Richmond County||$1,089,300|
|Dutchess County, Orange County||$726,525|
|Tennessee||Cannon County, Cheatham County, Davison County, Dickson County, Macon County, Maury County, Robertson County, Rutherford County, Smith County, Sumner County, Trousdale County, Williamson County, Wilson County||$890,100|
|Utah||Summit County, Wasatch County||$1,089,300|
|Virginia||Arlington County, Clarke County, Culpeper County, Fauquier County, Fairfax County, Loudon County, Rappahannock County, Madison County, Prince William County, Spotsylvania County, Stafford County, Warren County, Alexandria City, Falls Church City, Fairfax City, Fredericksburg City, Manassas City, Manassas Park City||$1,089,300|
|Washington State||Snohomish County, King County County, Pierce County||$977,500|
|West Virginia||Jefferson County||$1,089,300|
|U.S. Virgin Islands||All areas||$970,800|
|Washington, DC||All areas||$1,089,300|
Typical Requirements for Getting a Jumbo Loan
Before you leaf through local listings, it’s always best to have a good idea of how much house you can afford. If you earn a large income, have some significant savings and have a good credit history, a jumbo loan may be an option.
Qualifying for a jumbo loan is undoubtedly more difficult than qualifying for a conforming loan. For starters, many lenders require a strong credit score of 700 or higher for approval. Whereas conforming loan homebuyers may be able to get away with a lower score by making a bigger down payment, jumbo loan homebuyers usually won’t have that same luxury.
Next, you’ll also need to prove that you are as financially stable as you say you are. Your lender may ask for your tax returns, recent paychecks, W-2 or 1099 forms and bank account statements. These factors will have a major effect on the jumbo loan interest rate you receive.
Lastly, lenders only look to approve homebuyers who have a low or manageable debt-to-income (DTI) ratio. In most cases, you’ll need a DTI ratio of about 40% or less. The only way you might get around this is if you have a large savings to back you up.
Why Are Jumbo Loan Limits Necessary?
Conforming loan limits were first implemented by the Housing and Economic Recovery Act of 2008. They were put in place to make Freddie Mac- and Fannie Mae-backed mortgages easier to access for homebuyers getting conforming loans. The FHFA typically changes these limits on an annual basis to account for price movement in the real estate market.
As a result of the above legislation, jumbo loans have become especially risky for lenders, hence the stringent approval requirements. This is because Fannie Mae and Freddie Mac will not back mortgages that are larger than the conforming limits. As a result, lenders will take the hit if you default on your loan.
Ultimately, gaining the trust of your lender is the best way to increase your chances of getting a jumbo loan. Ensure your credit score is up to par, your debts are minimal and your steady income will be able to cover your payments throughout the course of the loan.
Tips for Finding the Right Lender
- Before you sign off on any loan, it’s important that you understand your current financial situation and future financial plans. A financial advisor can help with that. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you’re interested in taking out a large loan, it’s important that you do your research. SmartAsset’s list of the best jumbo mortgage loan lenders can help start your search.
- If you’re a first-time homebuyer, you’ll want to make sure you’re not missing any important information. Check out SmartAsset’s guide to the best mortgage lenders for first-time homebuyers to learn more.
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