Jumbo Loan Limits And Requirements For 2024: A Guide

If you’re looking to buy a high-priced home, you may need a jumbo loan – a mortgage that exceeds the borrowing limits set for conventional loans and allows you to borrow more than what’s allowed with standard conforming mortgages.

But how much can you borrow before you need a jumbo loan? The borrowing limits are updated annually by the Federal Housing Finance Agency (FHFA), so it’s important to stay informed about the +limits for 2024.

What Are Jumbo Loans?

Borrowers turn to jumbo loans when they need to finance residential real estate that is too expensive for conforming loans. A jumbo loan is considered a non-conforming loan because it exceeds the loan limits set by the FHFA each year for conventional mortgages.

Non-conforming loans, like jumbo loans, pose a higher risk for lenders. With jumbo loans, lenders are providing larger sums of money. If borrowers stop making their payments on jumbo loans, the lenders that originated these mortgages could take a larger loss. To offset this risk, most lenders usually require a larger down payment and often charge a higher interest rate.

How Do Conforming Loan Limits Influence Jumbo Loans?

Each year, the FHFA establishes conforming loan limits, which dictate the maximum mortgage size that the federally backed mortgage companies Fannie Mae and Freddie Mac will buy or guarantee.

If you’re buying a home with a price that exceeds these limits, you’ll need to apply for a non-conforming jumbo loan. The conforming loan limits vary by county, with some higher-cost areas having higher loan limits.

What Is The Jumbo Loan Limit For 2024?

For 2024, the FHFA set the conforming loan limit for one-unit properties in most parts of the U.S. at $766,550, an increase of $40,350 from the 2023 limit of $726,200.

This means that in most areas, if you need to take out a mortgage larger than $766,550, you’ll need to apply for a jumbo loan. The loan limits are also higher if you’re purchasing a two- to four-unit property. However, in certain high-cost areas, the conforming loan limits for a single unit can exceed $766,550.

Conforming Loan Limits By State And When You’ll Need A Jumbo Loan

In most states, the conforming loan limit for 2024 is set at $766,550 by the FHFA. However, there are some areas where the conforming loan limit is higher, allowing you to borrow more before needing a jumbo loan.

The FHFA designates certain high-cost areas where housing prices are particularly steep. In these areas, the conforming loan limit can be as high as $1,149,825. Many of these high-cost regions are in states like California, New York, Florida, Massachusetts and Maryland. This means that in some parts of the country, you can take out a mortgage exceeding $1 million and still have it classified as a conforming loan.

Additionally, in Alaska and Hawaii, the conforming loan limits are always set at the national ceiling established by the FHFA, which is $1,149,825 for one-unit properties.

How To Find Your Local Jumbo Mortgage Limit

You can find out how much you can borrow in your county before needing a jumbo loan by visiting the FHFA conforming loan limit map. Every year, the agency publishes an updated map listing the conforming loan limits in each state.

The map is color-coded according to loan limit values, with counties in which the conforming loan limit is $766,550 colored gray. There are also pockets of color for counties in which this limit is within the $766,551 – $950,000 range, the $950,001 – $1,149,824 range and exactly $1,149,825.

Jumbo Loan Borrower Requirements

Lenders have varying requirements for jumbo loans, with one of the biggest differences being the maximum loan amount they’re willing to back. For example, Rocket Mortgage^® offers a maximum jumbo loan limit of $3 million, while VA jumbo loans have a limit of $2.5 million.

In general, borrowers seeking jumbo loans will need to meet stricter requirements due to the increased risk for lenders. Some common jumbo loan requirements include the following:

• Down payment: Most lenders require larger down payments for jumbo loans, often of at least 20%. For a $900,000 jumbo loan, this could mean a down payment of $180,000.
• Credit score: You’ll generally need a higher credit score, too. Some lenders require a FICO^® Score of 720 or higher.
• Debt-to-income ratio (DTI): Lenders usually prefer a DTI of 43% or lower, including your new mortgage payment.
• Loan-to-value ratio (LTV): Lenders might want a lower LTV for jumbo loans, often no more than 80%.
• Cash reserves: Lenders may require borrowers to have cash reserves to cover at least 12 months of mortgage payments, in addition to down payment and closing costs.

When To Consider A Jumbo Loan Based On 2024 Loan Limits

If you need a mortgage that exceeds the FHFA’s conforming loan limits in your area, a jumbo loan might be your only option. However, make sure that you can afford the higher monthly payments, down payment and closing costs that come with it.

It’s also important to have enough savings to cover at least 12 months of mortgage payments, which can improve your chances of loan approval.

If you want to avoid a jumbo loan, consider an 80-10-10 mortgage, also known as a piggyback loan. With this loan option, you take out two mortgages – one for 80% of the home’s purchase price and another for 10% – and make a 10% down payment. However, not all lenders, including Rocket Mortgage, offer piggyback loans. It’s best to talk with your lender to see what your specific options are.

The Bottom Line

Jumbo loans may be a viable option if you want a home that exceeds the FHFA’s conforming loan limits. These loans typically require a higher credit score and a larger down payment due to the increased risk for lenders. It’s crucial to ensure that you can comfortably manage the higher monthly payments and have sufficient savings to cover at least 12 months of mortgage payments.

If you’re considering a jumbo mortgage loan, evaluate your financial situation to determine if it aligns with your long-term goals. To explore your jumbo loan options, start an application for a Jumbo Smart loan with Rocket Mortgage today.