Following the Federal Housing Finance Agency’s update to the baseline conforming loan limit in high-cost areas to over $1 million, more than 2 million homes no longer require a jumbo mortgage, according to new analysis by Zillow Home Loans.
The change may help buyers looking to purchase a home, as jumbo loans often come with additional fees and more stringent qualification standards, like requiring a higher minimum credit score, making them less affordable or desirable for many buyers.
Jumbo loans often require larger down payments, some in excess of 20 percent, compared with conventional loans.
For much of the country, the conforming loan requirement increased by $79,000 – going from $647,200 in 2022 to a baseline of $726,200 in 2023. In the most expensive parts of the country, the conforming loan limit was raised to $1,089,300, topping the $1 million mark for the first time.
“The addition of 2 million homes that now qualify for conforming loan options across the county is welcome news for homebuyers entering a shopping season with fewer homes on the market,” said Nicole Bachaud, Zillow Home Loans senior economist. “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.”