What is a Jumbo Mortgage?
A jumbo mortgage doesn’t have a technical definition; it is the “white space” where Agency mortgages stop. If it had a static definition it would never be the same two years in a row. And jumbo’s have multiple variables.
In 2020 the conforming loan limit set by Federal Housing Finance Agency (and adopted by Fannie Mae / FNMA, Freddie Mac / FHLMC, Federal Housing Administration / FHA, Veteran’s Administration / VA) for a single-family residence was $510,400. (the prior year it was $484,350 and the year before that it was $453,100 and changes almost every year).
This year the 2021 jumbo program now kicks in at:
$548,251 for a single family
$702,001 for a duplex
$848,501 for a three family
$1,054,501 for a four family.
Most Agency backed mortgages (amounts listed above) also have a High Balance feature which is overlaid by county limitations. In the counties, we do most of our work in (Essex, Norfolk, Plymouth, Suffolk, Middlesex, Rockingham, Strafford) that limit goes up to:
$724,500 for a single family
$927,500 for a duplex
$1,121,150 for a three family
$1,393,300 for a four family.
An astute Loan Officer realizes that there is a choice above the conforming loan limit to pursue either an Agency High Balance OR a Jumbo application. BOTH HAVE INDIVIDUAL ADVANTAGES (and weaknesses) that are too complicated and fluid to list here.
If your mortgage balance exceeds the top loan limits be sure to engage competent counsel to guide you on the choices. I promise if there is only 1 tool in the toolbox, that will be the tool that will be recommended. Our experience shows that in EVERY case, one tool will have a vast competitive advantage over the other. Many mortgage companies (but not GoldCoast) restrict their jumbo offering to just Adjustable Rate Mortgages.
A definition of a jumbo mortgage is closest to that of an orphan. It doesn’t have the benefits of an Agency mortgage and at certain times, it is not wanted by the investment community. Access to a jumbo mortgage, as demonstrated earlier in this past decade, is not always a certainty.