New loan limits move millions of homes out of jumbo status

Thanks to the Federal Housing Finance Agency (FHFA) increasing its conforming loan limits in 2023, more than 2 million homes nationwide no longer require jumbo financing, according to a new report from Zillow.

The shift comes after the FHFA raised the conforming loan threshold to $1,089,300 in high-cost areas, moving many properties under the new limit. This could be good news for prospective buyers looking to secure financing for such homes, since not having to apply for a jumbo loan could mean dodging the stricter credit criteria and additional fees that often come with these mortgages. Jumbo loans, for example, often require a minimum credit score of 700, whereas conforming loan products often can be secured with scores in the 600s.

“The addition of 2 million homes that now qualify for conforming loan options across the country is welcome news for homebuyers entering a shopping season with fewer homes on the market,” said Nicole Bachaud, senior economist at Zillow Home Loans. “Home price appreciation has slowed significantly, and this means that homes nearing jumbo loan territory will stay eligible for conforming loans longer than we have seen in the last few years.”

Importantly, this change only affects certain parts of the country, specifically the 103 counties where the new conforming loan caps rose above $1 million. These counties are chiefly concentrated among expensive coastal areas and in pricey metros nestled in the Rocky Mountain region.

For most of the U.S., the conforming loan limit rose to $726,200, leaving expensive properties in these areas firmly within jumbo loan territory.

“Buyers should educate themselves about loan limits in their area and speak with qualified loan officers so they are making informed choices about their home purchase and the best loan option for their personal financial situation,” Bachaud said.


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