There are a number of different "money buckets" in the world of lending, and today I'm going to talk about conforming (aka conventional) vs. jumbo. Why should people know about this? Because with higher purchase prices usually comes higher loan amounts. With higher loan amounts can come more documentation & more boxes to check to qualify.
Conventional loans conform (hence the term conforming loan) to the standards set by Fannie Mae & Freddie Mac. They have guidelines that the lending world follows that will give them a big "Accepted/Eligible" stamp on loans that can be sold to them. This stamp can be generated when we (lenders) run the loan through an Automatic Underwriting System (AUS).
The baseline conforming loan limit for 2023 is $715,000 – up from $647,200 in 2022.
There is usually a "high conforming" loan limit as well determined by county. For 2022 in San Diego county, the high conforming loan limit was $879,750. In Los Angeles, $970,800, and in Seattle (King, Pierce, and Snohomish counties), $891,250.
Any loan amount above these pre-determined numbers would fall into a different money bucket: jumbo loans. This will be our next topic - stay tuned!
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