When applying for a mortgage loan in Seattle, Washington, there’s a good chance you’ll encounter the terms “jumbo” and “conforming.” These terms are used to describe the size of the home loan, in relation to existing limits and guidelines. Here’s what you need to know about Seattle jumbo loan limits in 2017.
Effective April 2018 Sammamish Mortgage has expanded our high balance conforming loans to $679,650 regardless of the county loan limit. This allows our clients to avoid the tighter loan guidelines and higher rates and costs generally associated with Jumbo Loans including options with less than 20% down.
Conforming vs. Jumbo Mortgage Loans
A conforming loan is one that meets (or “conforms”) to the underwriting guidelines used by Fannie Mae and Freddie Mac. You’ve probably heard of these two organizations before. They are the government-sponsored enterprises (GSEs) that buy mortgage products from lenders, securitize them, and then sell them to investors. All of this happens in the “secondary” mortgage market, which involves Wall Street.
Conforming caps are determined by the Federal Housing Finance Agency (FHFA), the agency that oversees Fannie and Freddie, and they vary by county. When a Seattle home loan exceeds the conforming limit for King County, Washington, it is said to be a “jumbo” mortgage.
According to the FHFA, the 2016 / 2017 conforming loan limit for a single-family home in King County, Washington is $540,500. The limits go up for duplexes, triplexes, and “four-unit” properties. But for a single-family residence, the maximum conforming loan size for the county is $540,500.
Seattle Jumbo Loan Limits in 2017
Technically speaking, there is no “jumbo loan limit” for Seattle, despite the common use of the phrase. There is a conforming loan limit for King County, which is currently set at $540,500. Anything above that is considered a non-conforming jumbo loan, because it exceed the maximum size limits used by Freddie Mac and Fannie Mae.
In Seattle, jumbo mortgage loans can range in size from $541,000 (which is just above the conforming limit) up to millions of dollars. There is no industry-wide rule for the maximum size of a jumbo loan in Seattle, or elsewhere in Washington. Different lenders have different standards when originating mortgages.
Stricter Criteria May Apply
By definition, a Seattle jumbo mortgage exceeds the size limits used by Fannie Mae and Freddie Mac. As a result, these oversized loans cannot be readily bought and sold through the secondary mortgage market. This makes them a bit harder to obtain, when compared to a “regular” conforming home loan.
It’s common for mortgage lenders to have higher standards for jumbo borrowers. For instance, a home buyer seeking a jumbo loan in Seattle may have to put more money down. Lenders often require at least 20% down with jumbo mortgage products, though this number is not set in stone.
Credit score and debt-to-income (DTI) requirements can be more strict on the jumbo side as well. The reason for these higher standards is that lenders carry more risk, due to the size and non-conforming nature of the loan.
Do you need a mortgage loan to buy or refinance a home in Seattle, Washington? Do you have questions about conforming and jumbo mortgage products? We can help.
Sammamish Mortgage has been serving borrowers in Seattle for more than 20 years. We are a family-owned company offering competitive rates backed by excellent customer service. Please contact us to get pre-approved for a home loan, or to receive a free rate quote. We look forward to hearing from you.