When shopping for a mortgage, you might come across terms such as “conforming loan,” “non-conforming loan,” and “jumbo loan.” These terms are used when talking about mortgage loan amount limits. Conforming loan limits are set by the federal government, but non-conforming loans are not. A jumbo loan is a type of non-conforming loan that can be used to buy a more expensive home.
Knowing whether you have a conforming or non-conforming loan matters because that can affect your mortgage financing options. If you're shopping for a home loan or soon will be, learning the lingo can help.
What Are Conforming and Non-Conforming Loans?
A conforming loan is a mortgage that adheres to maximum loan limits as set by the U.S. government. Specifically, those limits are established annually by the Federal Housing Finance Agency (FHFA).
Conforming loans also follow underwriting guidelines set by Fannie Mae or Freddie Mac. These government-sponsored enterprises (GSEs) guarantee most mortgages in the U.S. Generally speaking, conforming loans:
- May be easier to qualify for
- Carry lower interest rates
This is because they have backing from Fannie Mae and Freddie Mac.
Non-conforming loans don't follow the conforming loan limit guidelines. Your ability to qualify for a non-conforming loan, the amount you can borrow, and the interest rate you'll pay can vary from lender to lender.
Jumbo loans can be conforming or non-conforming. A jumbo loan is a mortgage that exceeds the FHFA loan limits. Jumbo loans can be more expensive and have higher down-payment or credit-score requirements compared with mortgages that meet conforming loan limits.
When determining conforming loan limits and jumbo mortgage limits, the FHFA sets them by county. Some states follow the same limit for all counties, while others have individual limits for different counties. Unless a different threshold is specified, you'd follow the regular conforming or jumbo loan limits.
The FHFA applies higher limits to certain high-cost areas of the country. Special statutory provisions also require different loan limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands to account for rising home values there. The Department of Housing and Urban Development (HUD) offers an online lookup tool that you can use to check the conforming loan limits or jumbo loan limits in a given county.
Conforming, non-conforming, and jumbo loans are all types of conventional loans, meaning they're not part of a specific government mortgage program.
2021 Conforming Loan Limits
The Housing and Economic Recovery Act (HERA) requires that baseline conforming loan limits be adjusted annually to reflect changes in average home prices in the U.S. For 2021, the regular conforming loan limit set by the FHFA is $548,250 for one-unit properties in most areas. The maximum limit for certain high-cost areas is $822,375.
In most U.S. counties, the baseline matches the regular conforming loan limit mentioned above. If you're interested in finding out what conforming loan limits are where you live, this chart highlights some of the counties where they are above the current baseline.
|State/Territory||County||Conforming Loan Limits|
|California||El Dorado County, Placer County, Sacramento County, Yolo County||$598,000|
|California||Santa Barbara County||$660,100|
|California||San Luis Obispo County||$701,500|
|California||Monterey County, Ventura County||$739,450|
|California||San Diego County||$753,250|
|California||Alameda County, Contra Costa County, Los Angeles County, Marin County, Orange County, San Benito County, San Francisco County, San Mateo County, Santa Clara County, Santa Cruz County||$822,375|
|Colorado||Adams County, Arapahoe County, Broomfield County, Clear Creek County, Denver County, Douglas County, Elbert County, Gilpin County, Jefferson County, Park County||$596,850|
|Colorado||San Miguel County||$649,750|
|Colorado||Garfield County, Pitkin County||$765,600|
|Hawaii||Hawaii County, Honolulu County, Kalawao County, Kauai County, Maui County||$822,375|
|Idaho||Blaine County, Camas County, Lincoln County||$625,500|
|Maryland||Calvert County, Charles County, Frederick County, Montgomery County, Prince George's County||$822,375|
|Massachusetts||Essex County, Middlesex County, Norfolk County, Plymouth County, Suffolk County||$724,500|
|Massachusetts||Dukes County, Nantucket County||$822,375|
|New Hampshire||Rockingham County, Strafford County||$724,500|
|New Jersey||Bergen County, Essex County, Hudson County, Hunterdon County, Middlesex County, Monmouth County, Morris County, Ocean County, Passaic County, Somerset County, Sussex County, Union County||$822,375|
|New York||Dutchess County, Orange County||$726,525|
|New York||Bronx County, Kings County, Nassau County, New York County, Putnam County, Queens County, Richmond County, Rockland County, Suffolk County, Westchester County||$822,375|
|North Carolina||Camden County, Pasquotank County, Perquimans County||$625,500|
|Tennessee||Cannon County, Cheatham County, Davidson County, Dickson County, Macon County, Maury County, Robertson County, Rutherford County, Smith County, Sumner County, Trousdale County, Williamson County, Wilson County||$586,500|
|U.S. Virgin Islands||Islands of St. Croix, St. John, St. Thomas||$822,375|
|Utah||Salt Lake County, Tooele County||$600,300|
|Utah||Box Elder County, Davis County, Morgan County, Weber County||$646,300|
|Utah||Summit County, Wasatch County||$817,650|
|Virginia||Alexandria City, Arlington County, Clarke County, Culpeper County, Fairfax City, Fairfax County, Falls Church City, Fauquier County, Fredericksburg City, Loudoun County, Madison County, Manassas City, Manassas Park City, Prince William County, Rappahannock County, Spotsylvania County, Stafford County, Warren County||$822,375|
|Washington||King County, Pierce County, Snohomish County||$776,250|
|Washington, D.C.||District of Columbia||$822,375|
|West Virginia||Jefferson County||$822,375|
Again, areas that have higher conforming loan limits are ones that tend to have higher home values. If you don't see your specific county listed here, then you would be subject to the regular conforming loan limits.
Jumbo Loan Restrictions
As mentioned, jumbo loan limits exceed the conforming loan limits. If you're planning to buy a house that's valued above the conforming loan limit for your county, you might need a jumbo loan to close the deal.
For example, say you want to buy a home in San Francisco, where the typical home value was more than $1.4 million as of June 2021. Even though the high-cost-area conforming loan limits apply here, they're still well below the median home value. So if you want to buy, you may need a jumbo loan to make it happen.
Keep in mind that jumbo loans may require you to put more money down. So instead of 20%, for example, you may need 30% or more as a down payment. Lenders may also require you to have a higher credit score to qualify.
Paying off existing debt to reduce your debt-to-income (DTI) ratio could work in your favor, as it shows lenders you have the means to repay a jumbo loan.
Should You Get a Jumbo Loan?
A jumbo loan could make sense if you plan to buy a more expensive home and you need to borrow more than what's allowed under the conforming loan limits. But before going forward with a jumbo loan, consider:
- How likely you are to qualify, based on your credit history, income, and current debt.
- How much you can afford to spend on mortgage payments each month.
- Other costs of owning a home, including property taxes, homeowners insurance, and maintenance.
- What cash resources you have to make the down payment and pay closing costs.
Also, consider which way home values are trending in the area you're planning to buy in. If home values are increasing steadily, then you may want to apply for a jumbo loan sooner rather than later. On the other hand, if home values seem likely to decline, then you may be better off waiting on obtaining a jumbo loan until prices stabilize.
Whether you choose a conforming or jumbo loan, shop around with different lenders to compare mortgage rates, loan terms, and minimum qualification requirements.
Frequently Asked Questions (FAQs)
Conforming loan limits, non-conforming loans, and jumbo loan limits can seem a little confusing if you aren't a mortgage expert. So here are answers to a few of the most commonly asked questions about these loan options.
What is a jumbo loan?
Again, a jumbo loan is any loan that exceeds FHFA loan limits. Jumbo loans can be conforming or non-conforming. They can also be conventional loans if they're not part of a federal government loan program.
Taking out a jumbo loan is something you may consider if you're buying a more expensive home. A regular conforming loan, based on the conforming loan limits for the county or state the home is located in, may not be large enough to complete the purchase.
How do you qualify for a jumbo loan?
Qualifying for a jumbo loan is based on the same factors as qualifying for a conforming loan. For example, lenders can review your credit reports and credit scores, income, employment history, assets, and debt. They also can take into account how much you plan to put down on a home when borrowing under jumbo mortgage limits.
The difference from a conforming loan is that lending requirements may be tighter because you're getting a substantially larger mortgage. So, again, you may need a higher credit score, a higher income, a larger down payment, and lower debt levels to qualify. Talking to a jumbo loan lender or mortgage expert can help you decide if a jumbo loan is right for you and what you'll need to qualify.