A jumbo loan is also known as a “non-conforming” mortgage because it is issued for an amount that exceeds the conforming limits regulated by two federally sponsored enterprises (Fannie Mae & Freddie Mac). Beginning in 2019, the maximum conforming loan limit will be $484,350 in most markets throughout the US. However, in high-cost housing markets where home prices are above average, the limit is $726,525. Any loan amount higher than these numbers will require jumbo financing. Jumbo loans are available for new home purchases and refinancing.
Non-conforming jumbo loans are actually quite common. What makes them different from conforming loans is rather than meeting guidelines established by Fannie Mae and Freddie Mac, the lender sets the guidelines. These loans with a different set of guidelines, or requirements for getting one, are important because the average home prices vary widely across the United States, within states, and even cities and communities.
A $500,000 house in a small town in the Midwest could be quite extravagant. But a house for the same cost in parts of California could be quite modest. Many jumbo loan borrowers need this type of mortgage to buy large, expensive homes. But for others, this loan is used by a wider range of people looking for a mortgage in a housing market where home prices are high, well above the local or national average. Bydand offers many different types of jumbo loans to meet the needs of all types of borrowers.