When you’re securing a loan for a particularly expensive house, a regular mortgage may not suffice. For 2020, if your required loan amount surpasses the $510,400 conforming loan limit set by the Federal Housing Finance Agency (FHFA), 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 average home values.
Work with a financial advisor to build a long-term financial plan that accounts for your mortgage payments.
Jumbo Loan Limits for 2020
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 2020 is $510,400, which means any mortgage that’s larger than that is a jumbo loan. Loans above these limits cannot be backed by government entities Fannie Mae and Freddie Mac. That makes them inherently riskier than a conforming loan.
While the aforementioned $510,400 limit is generally seen as the standard for 2020, 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 $765,600 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 $510,400 standard. If the place you’re looking to buy a home in isn’t listed here, its loan limit is $510,400.
|Areas With a Conforming Loan Limit Above $510,400|
|Placer County, El Dorado County, Sacramento County, Yolo County||$569,250|
|Santa Barbara County||$625,500|
|San Luis Obispo County||$690,000|
|San Diego County||$701,500|
|Colorado||Adams County, Broomfield County, Denver County, Arapahoe County, Douglas County, Elbert County, Jefferson County, Park County, Clear Creek County, Gilpin County||$575,000|
|Lake County, San Miguel County||$625,500|
|Pitkin County, Garfield County||$765,600|
|Connecticut||Strafford County, Rockingham County||$690,000|
|Idaho||Blaine County, Lincoln County, Camas County||$625,500|
|Maryland||Queen Anne’s County, Anne Arundel County, Howard County, Carroll County, Baltimore County, Baltimore City, Harford County||$520,950|
|Frederick County, Montgomery County, Prince George’s County, Charles County||$765,600|
|Massachusetts||Essex County, Middlesex County, Suffolk County, Norfolk County, Plymouth County||$690,000|
|New Hampshire||Fairfield County||$601,450|
|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||$765,600|
|New York||Dutchess County, Orange County||$726,525|
|Putnam County, Westchester County, Rockland County, Bronx County, New York County, Kings County, Queens County, Nassau County, Suffolk County||$765,600|
|North Carolina||Camden County, Pasquotank County, Perquimans County||$625,5000|
|Dickson County, Cheatham County, Robertson County, Sumner County, Macon County, Trousdale County, Smith County, Wilson County, Davidson County, Williamson County, Maury County, Rutherford County, Cannon County||$563,500|
|Utah||Tooele County, Salt Lake County||$600,300|
|Box Elder County, Weber County, Davis County, Morgan County||$646,300|
|Summit County, Wasatch County||$762,450|
|Virginia||Caroline County, King and Queen County, King William County, New Kent County, Hanover County, Louisa County, Goochland County, Henrico County, Charles City County, Prince George County, Colonial Heights City, Chesterfield County, Richmond City, Powhatan County, Cumberland County, Amelia County, Dinwiddie County, Sussex County, Petersburg City, Hopewell City||$535,900|
|Spotsylvania County, Fredericksburg City, Stafford County, Fauquier County, Culpeper County, Madison County, Rappahannock County, Warren County, Prince William County, Manassas Park City, Clarke County, Loudoun County, Alexandria City, Falls Church City, Fairfax City, Fairfax County, Arlington County||$765,600|
|Washington, D.C.||District of Columbia||$765,600|
|Washington State||Snohomish County, King County County, Pierce County||$741,750|
|West Virginia||Jefferson County, King County County, Pierce County||$765,600|
|U.S. Virgin Islands||All areas||$765,600|
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 36% 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. These limits are typically adjusted by the FHFA 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 more stringent requirements for approval. 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 chance 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. SmartAsset’s free financial advisor matching tool will help you find a financial advisor in your area who can help you with that. Find a local advisor and get started today.
- If you’re interested in taking out a large loan, it’s important that you do your research. SmartAsset has compiled its list of the best jumbo mortgage loan lenders to get you started.
- If you’re a first-time homebuyer, you’ll want to make sure you’re not missing any important information about the home buying and lending process. Check out SmartAsset’s guide to the best mortgage lenders for first-time homebuyers to learn more.
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