This is the latest entry in our blog post series that addresses some of the most common questions among California home buyers. Today’s question is: What is considered a jumbo mortgage loan in California, in 2017?
A jumbo loan is a conventional mortgage loan that is too large to be sold to Freddie Mac and Fannie Mae, the two government-sponsored corporations that buy and sell bundled mortgages.
These size restrictions vary by county. For many counties in California, the conforming loan limit is $424,100, for a single-family home. So in these areas, a jumbo loan would be one that exceeds $424,100.
Counties with higher median home values, like Los Angeles and Alameda County, have higher limits up to a maximum of $636,150. So in those more expensive real estate markets, a jumbo mortgage loan would be anything above $636,150.
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So that’s it in a nutshell. Here’s a more in-depth look at this subject.
What Is Considered a Jumbo Loan in California?
These days, most types of mortgage loans have size limits associated with them. This goes for conventional, FHA and VA-guaranteed loans.
(Definition: a “conventional” mortgage loan is one that is not guaranteed or insured by the federal government. This makes it different from FHA and VA loans, which do receive government backing in some form.)
When a California mortgage loan exceeds these size limits, it is referred to as a jumbo loan. Essentially, it is too large to be acquired by Fannie Mae or Freddie Mac. It is a “non-conforming” product that does not conform to their purchase criteria.
Getting back to the question at hand: What is considered a jumbo loan in California? This will depend on the county where the property being purchased is located. Conforming loan limits vary from one county to the next, so the definition of a California jumbo loan also varies by county. Here is a list of current limits for all counties. Find your county on this list, and you’ll know where the jumbo loan threshold begins.
Here’s where a jumbo loan starts in the five most populous counties in California:
So in the San Diego area, for example, a jumbo loan would be one that exceeds the single-family loan limit of $612,950. In Los Angeles County, the threshold begins just north of $636,150, and so on. Use the link provided above to find the 2017 conforming limits for all counties in California.
The Limits Were Raised for 2017
Conforming loan limits across the country were increased from 2016 to 2017. Be aware of this when researching the subject online, as you might encounter outdated information. Our website contains the most current information as to what’s considered a jumbo loan in California (see links provided above).
At the end of 2016, federal housing officials announced they would be increasing loan limits for most counties in the U.S. This was a direct response to the significant home-price gains that occurred during 2016. Limits were raised for FHA, VA and conventional mortgages.
To recap: What is considered a jumbo loan in California? In the more affordable counties across the state, a jumbo mortgage is one that exceeds the conforming limit of $424,100. In the more expensive markets like the Bay Area and Los Angeles, a jumbo loan is anything over $636,150. And there’s a broad spectrum in between.