Deadline to increase jumbo loan limits approaching quickly

by Justin da Rosa23 Jul 2015
The Federal Housing Finance Agency (FHFA), which sets jumbo loan limits, began collecting public opinion about a proposed increase in the jumbo loan threshold and the deadline to submit input is July 27.

A hike in the threshold for jumbo loans could benefit originators because clients are more comfortable with conforming loans than jumbo loans, according to one professional.

“For some it’s a psychological hurdle to get over—just the word ‘jumbo’—so [raising the limit] helps,” Allen Decuyper, an agent with Nashville-based Neal Clayton Realtors told the Wall Street Journal.

Currently, the threshold for jumbo loans in most states is $417,000 and $625,500 in higher-priced markets.

If the FHFA does decide to raise the baseline for jumbo loans, the new rule will go into effect on January 1, 2016.

And if the limit were to be increased, clients would more easily qualify for pricier homes – meaning a larger potential pool of business for brokers -- since more loans will be considered conforming. 

Clients typically have to put less money down and aren’t required to have as high a FICO score for conforming loans than they do for jumbo loans.

But regardless of the outcome, originators should be just fine, according to one player.

“Right now I can price a jumbo loan better than a conforming loan by about half percent,” Elliott Pratt of Mortgage Network told Mortgage Professional America. “A jumbo borrower typically makes more money and has better credit and I’m encouraged by the jumbo market these days.”


  • by Ken Go Broker 1st Innocstive Finance | 7/23/2015 10:22:33 AM

    Any word on when they would increase mortgage limits for counties like San Bernardino and riverside? The current FHA limits $355,350 . I believe those counties are suppressed by these limits. Prices have gone up above these limits and first time buyers can't get a mortgage due to these limitations. I also believe that is why the builders have been holding back in these counties.

  • by ABBM | 7/23/2015 5:25:30 PM

    What are they waiting for? Most mortgages that come my way are extremely to large for Fannie or Freddie. I would like to see them go up to at least 5M. I might actually make some money. For sure borrowers in that range have assets and are going to be a much more stable borrower than a 100k borrower.


Is TILA-RESPA a good or bad thing long term?