December 2, 2009

In order to understand what a Jumbo loan is, it is important to know what is not a Jumbo loan. The non-jumbo loans are called ‘Conforming Loans'. Conforming loans are those loans that conform to Fannie Mae and Freddy Mac guidelines. Banks that issue these loans are obligated to make sure the loan meets the rules set by Fannie and Freddy. Fannie and Freddy have stipulated that their standard maximum loan amount at $417,000.00 nationwide. Loans under this amount typically have the best rates and the ones most used in advertisements.

Any loans above this amount are in the Jumbo loan category but there are a number of different versions. Fannie Mae and Freddy Mac have issued a special category of loans called ‘Conforming Jumbo' loans as part of the stimulus package passed by Congress in 2009. These loan limits vary throughout the nation based on the median home values. For any area that has a median value above $365,000.00 there is a calculation to determine a maximum loan limit. These areas are considered to be high cost areas and are assigned a loan limit that is valid through 2010. For a Seattle home mortgage or a Bellevue home mortgage the Conforming Jumbo loan limit is $567,500.00. In fact this loan limit has been approved for all of King, Pierce and Snohomish Counties. This loan is capped at $729,750.00 and applies in a few areas such as San Francisco and Los Angeles. The loan allows for 10% down payment which is unusual for Jumbo loans. Interest rates on these loans are about .375% higher than regular conforming loan rates.

Loan amounts above this amount falls in to another category called just Jumbo or Super Jumbo. These loans are issued by lenders that do nor have anything to do with Fannie or Freddy. They are typically done by ‘portfolio lenders' that keep the loans and do not sell them but keep them on their own books. There are many lenders that offer these loans at very good rates but the qualifications can be much more conservative. The loan amounts can be as high as $3 million. The equity or down payment requirements can be as high as 50% for the better rates. There are loan options at very high loan amounts with 20% down payment. The best rates in this category are Adjustable Rate Loans. Bellevue mortgage rates in this category currently can be in the low 4% range with good credit scores and meet other requirements.

Other Jumbo loans will allow a 90% loan with no mortgage insurance.

Call for details and see the best option that you qualify for.