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Mortgage Rates on Jumbo Loans
What are mortgage rates on jumbo mortgages versus traditional conforming home loans?
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3 Replies
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As of June 2024, the average mortgage rate for a 30-year fixed jumbo loan is approximately 7.16% to 7.21% for borrowers with 740 credit scores. These rates can vary depending on several factors, including the lender, the borrower’s credit score, down payment amount, and overall financial profile. Jumbo loans typically have higher interest rates compared to conforming loans due to the larger loan amounts and increased risk to lenders. For more detailed information, you can refer to sources like https://www.preferredmortgagerates.com/
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Frequently asked questions from homebuyers, homeowners, and realtor partners is how are the mortgage rates on jumbo loans compared to government backed loans and conventional loans. Jumbo loan mortgage rates are typically higher compared to government-backed loans like FHA and VA loans, as well as conventional conforming loans. Here’s a more detailed comparison: Jumbo Loans vs Government-Backed Loans: Government loans like FHA and VA carry lower mortgage rates because they are insured by the federal government, lowering the lender’s risk. Jumbo loans have no government guarantee, so lenders view them as riskier, resulting in higher interest rates. The mortgage rate difference can be 0.25% to 0.50% higher for a jumbo loan compared to FHA or VA.
Jumbo Loans vs Conventional Conforming Loans: Conventional conforming loans meet the loan limits set by Fannie Mae and Freddie Mac (up to $776,550 in most counties). Jumbo loans exceed these limits, up to multimillion-dollar amounts. Conforming loans typically have lower rates than jumbo loans since they can be acquired by Fannie/Freddie. The rate difference is usually around 0.25% higher for a jumbo loan versus a conforming loan. The exact jumbo loan rate can vary significantly by lender and the borrower’s qualifications like credit score, down payment, and income documentation. But in general, jumbo borrowers can expect a rate premium of around 0.25% to 0.50% above conforming and government-backed mortgage rates due to the higher risk for lenders.
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This reply was modified 4 months, 4 weeks ago by George.
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This reply was modified 4 months, 4 weeks ago by
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Comparison of Mortgage Rates: Jumbo Loans vs. Government-Backed and Conventional LoansJumbo Loans
- Interest Rate: Higher than conventional and government-backed loans.
- Current Rate: Around 7.16% to 7.21%.
- Loan Amount: Exceeds conforming loan limits (varies by region, typically over $726,200).
Conventional Loans
- Interest Rate: Lower than jumbo loans.
- Current Rate: Approximately 6.5% to 7.0%.
- Loan Amount: Up to conforming loan limits set by the FHFA.
Government-Backed Loans
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FHA Loans:
- Interest Rate: Lower than jumbo loans, slightly higher than conventional loans.
- Current Rate: Around 6.22% to 7.01%.
- Loan Amount: Up to FHA loan limits (varies by region).
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VA Loans:
- Interest Rate: Often lower than both conventional and jumbo loans.
- Current Rate: Around 6.42% to 6.70%.
- Loan Amount: No strict limits, but typically aligned with conforming loan limits.
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USDA Loans:
- Interest Rate: Competitive, often lower than conventional loans.
- Current Rate: Similar to or slightly lower than conventional loans.
- Loan Amount: Up to USDA loan limits for rural areas.
Jumbo loans generally have higher interest rates compared to conventional and government-backed loans due to the larger loan amounts and increased risk to lenders. Conventional loans offer lower rates than jumbo loans but slightly higher than government-backed loans, which often provide the most competitive rates for eligible borrowers.