A jumbo home loan is a mortgage that exceeds the limits for loan size accepted by Fannie Mae and Freddie Mac, two government-sponsored corporations. These ceilings, called "conforming limits," are set by the Federal Housing Finance Authority (FHFA). In New Jersey, the confirming limits vary depending on the county and metropolitan area where the loans are made.
Definition
A jumbo loan in New Jersey exceeds the size of a conforming loan set by U.S. housing authorities like Fannie Mae, Freddie Mac and the Federal Housing Finance Authority (FHFA). Most mortgage lenders offer jumbo mortgages. These loans have higher interest rates and may require a larger down payment than for a typical conforming loan in New Jersey.
Southwestern Counties
The FHFA sets conforming limits by county or metropolitan area, with the lowest conforming limit (and jumbo loan floor) for any county being $417,000. Jumbo loan sizes start at $417,000 or $420,000 in the following New Jersey counties: Burlington, Camden, Cumberland, Gloucester, Salem and Warren.
New York Metropolitan Area
Some counties in northeastern New Jersey are part of the New York City metropolitan area. These counties have a conforming loan limit of $729,750, meaning that loans greater than this amount will be jumbo loans. Included in the New York City metropolitan area are all or parts of the following counties: Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex and Union.
Other NJ Areas
The other metropolitan areas of New Jersey have separate conforming limits set by the FHFA. In Atlantic City, jumbo loans are considered to be mortgages above $453,750. Trenton-Ewing has a conforming limit of $440,000, and Ocean City's is $487,500. Parts of the southwestern counties listed above are included in the Philadelphia metropolian area, where jumbo loans start at $420,000.
Time Frame
The FHFA reviews the conforming loan limits every year for New Jersey and determines if any changes should be made in determining the levels at which jumbo loans will start. As of December 2010, conforming loan limits had not been changed since 2006.