What counts as a jumbo loan?
What counts as a jumbo loan depends on which part of the country you live in. While in most counties a jumbo loan is any mortgage over $424,100 for a one-unit property, this limit does increase for both high-cost areas and if there is more than one unit. In Alaska, San Francisco, Los Angeles, New York City, Washington, D.C, and a handful of high-priced towns, like Aspen, Park City, and Jackson Hole, the threshold for a jumbo mortgage for a one-unit property is $636,150. In other cities, such as Boston, Salt Lake City, Denver, and Seattle, the threshold for a one-unit property jumbo loan falls somewhere between $424,100 and $636,150. Honolulu has the highest minimum threshold for a jumbo loan in the country at $721,050 for a one-unit property.
Advantages of jumbo loans
The main advantage of jumbo loans is their size. If you have your eye on a property that exceeds FHFA loan limits and you don’t have enough money on hand to cover the amount being asked for by the seller then you are going to need a jumbo loan. In recent years, interest rates for jumbo loans have also come down and they are now comparable to interest rates offered for conventional conforming loans. Down payment requirements on jumbo loans have also decreased in recent years as the economy has recovered.