JUMBO & HIGH BALANCE MORTGAGES
There are currently 3 tiers of mortgage rates:
Conventional conforming (Fannie Mae/Freddie Mac) mortgage rates are based on loan amounts up to $424,100 for single unit residences. Higher loan amounts are allowed for multi-unit properties:
$543,000 (2 units), $636,350 (3 units), $815,650 (4 units)
FHA Mortgage rates are based on loan amounts up to $275,665 for single family residences, $352,950 for duplexes, $426,625 for triplexes and $530,150 for 4 unit properties.
High Balance loans are available for both conforming and FHA loans in select counties with higher median home prices. This tier of rates has only been in existence for a few years and high balance conforming loan limits for single family residences are currently $636,150. Rates are typically 1/8% to 1/4 % higher than conforming rates. Like conforming loans, higher limits are allowed for multi-unit properties:
$814,500 (2 units), $984,525 (3 units), $1,223,475 (4 units)
FHA high balance loan limits are as follows:
$729,750 (1 unit), $934,200 (2 units), $1,129,250 (3 units),
$1,403,400 (4 units)
Jumbo rates are conventional conforming rates for loans above $417,000.
Historically, jumbo rates were significantly higher than conventional rates, but due to the emergence of private investment into the jumbo mortgage backed securities market, rates have declined and are now comparable to and in some cases lower than conforming rates. Most jumbo rates today are priced about 1/4 % lower than high balance rates.
Bottom Line: If you’re planning on buying a home valued at more than $450,000 check on pricing options for all available tiers. If your timing is right, you may be able to obtain a lower rate on a jumbo loan than a conforming loan.