A jumbo loan might sound like something for millionaires, but it may be your best choice to finance even a modest home in some housing markets.

What is a Jumbo Loan?

A jumbo home loan, also commonly referred to as a jumbo mortgage, is a financial instrument designed to facilitate the purchase or refinancing of high-value residential properties that exceed the conforming loan limits established by government-sponsored entities like Fannie Mae and Freddie Mac. Unlike conventional mortgages, which adhere to these predetermined limits, jumbo loans are tailored to accommodate the substantial financing needs associated with luxury homes or properties located in high-cost real estate markets. Typically, the loan amount for a jumbo mortgage exceeds the maximum limit set by these agencies, making it necessary for borrowers to seek specialized financing options that can accommodate the larger sums required for the acquisition or refinancing of high-end residences. As a result, jumbo home loans often come with distinct qualification criteria, interest rates, and underwriting processes compared to standard mortgages, reflecting the unique financial landscape of upscale real estate transactions.

Changes in Jumbo Loan Limits

The new jumbo loan limit is now $766,550. That means any loan amount of $766,550 or under can be sold to Fannie Mae or Freddie Mac as a “conforming” loan. A loan amount above $766,550 would be considered “jumbo”, which often means higher rates and a larger down payment requirement. I’m excited about the increase because it means the need for jumbo portfolio ARM products are becoming much less important. A person could buy a house for $1,025,000, put 25% down, and still get a typical 30Y fixed conforming rate. Think of this…a person could buy a house for $810,000, put 5% down, and still get a typical 30Y fixed conforming rate (with PMI of course).

  • 30 year conforming rate: 6.875%
  • 30 year jumbo rate: 8%

History of Conforming Loan Limits

Fun Fact on the conforming loan limit over the years. From 2006 thru 2016 it was $417,000. That’s the number most of you probably remember.

  • 2017 was $424,100
  • 2018 was $453,000
  • 2019 was $484,350
  • 2020 was $510,400
  • 2021 was $548,250

After that it really starting jumping…

  • 2022 was $647,200
  • 2023 was $726,200
  • 2024 now now $766,500

What are the requirements for a jumbo loan in Missouri?

To qualify for a jumbo loan in Missouri, borrowers must meet stricter requirements than they would for a conforming loan. The specific requirements may vary from lender to lender, but below are the typical requirements for borrowers seeking a jumbo loan in Missouri.

  • Higher credit score
  • Larger down payment
  • More assets
  • Lower debt-to-income ratio (DTI)
  • Additional home appraisals

Your mortgage broker will work with you to see if this loan product is right for you. Let us know if you need a recommendation. We have several that specialize in jumbo loans.