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Jumbo Loans are essential for financing high-value properties beyond the conforming loan limits set by the Federal Housing Finance Agency (FHFA).
In this article, we will explore these governmental limits, specifically the Jumbo Loan limits in Florida, how they compare to conforming loan limits, and what you need to know when considering a Jumbo Loan.
By the end of this guide, you can have a clearer understanding of the Jumbo Loan limits in Florida and how to secure a mortgage for your next home in the Sunshine State.
Start your application with MIDFLORIDA Credit Union.
What is a Jumbo Loan limit?
A Jumbo Loan limit is the maximum loan amount a lender can approve that is “conforming” to the government standards.
Any loan amount a lender approves above this limit must be classified as a “Jumbo Loan.”
The Federal Housing Finance Agency (FHFA) creates these conforming loan limits, which vary by region and are adjusted once a year based on changes in average home prices.
Why is conforming important?
Lenders pay close attention to what is conforming or not because conforming loans are eligible for purchase by certain government-sponsored enterprises (GSEs).
You likely know them by their titles: Fannie Mae and Freddie Mac.
When these GSEs buy a mortgage from a lender, it enables the lender to maintain greater liquidity and significantly reduce its risk—two highly beneficial things for them.
The FHFA, however, considers anything above the limit too risky, so the GSEs don’t get involved. In most cases, the lender takes the risk of this “Jumbo Loan” on its own.
As a result, Jumbo Loans are often paired with stricter underwriting standards and higher interest rates.
What is the conforming loan limit in Florida?
As of 2024, the conforming loan limit for most parts of the United States, including Florida, is $766,550. This limit applies to single-family homes.
For properties with multiple units, the conforming loan limits are higher. Specifically:
- Two-unit properties: $981,500
- Three-unit properties: $1,186,350
- Four-unit properties: $1,474,400
Any mortgage amount above these limits is considered a Jumbo Loan.
Jumbo Loan limits in Florida
There is no FHFA maximum limit for Jumbo Loans, as they are determined by individual lenders based on various factors, including:
- The borrower’s creditworthiness
- The borrower’s income
- The property’s value
However, in high-cost real estate markets like certain areas in Florida, Jumbo Loans can range from $1 million to several million dollars.
Factors affecting Jumbo Loan limits
Several factors influence borrowing amounts with a Jumbo Loan in Florida, including the following.
Property location
The value of properties varies significantly across different regions in Florida.
For instance, high-value areas like Miami, Palm Beach, and Naples may see higher Jumbo Loan amounts than less expensive regions.
Borrower’s financial profile
Your credit score, income, debt-to-income ratio, and cash reserves are foundational in determining your eligibility for a Jumbo Loan and the maximum amount you can borrow.
Lender’s criteria
Each lender sets its own criteria for Jumbo Loans, including maximum loan amounts.
It’s important to shop around and compare offers from multiple lenders to find the best terms and limits.
Why choose a Jumbo Loan?
Jumbo Loans are necessary for financing properties that exceed conforming loan limits.
They provide the flexibility to purchase luxury homes, high-value properties, and real estate in high-cost markets.
Jumbo Loans allow buyers to secure the necessary financing for such properties.
Advantages of Jumbo Loans
- Higher loan amounts: Jumbo Loans allow you to borrow significantly more than conforming loans, enabling you to finance high-value properties
- Flexible terms: Borrowers can choose from various loan terms and interest rate options, including fixed and adjustable rates, to suit their financial needs
- Potential investment opportunities: Financing a high-value property with a Jumbo Loan can open up investment opportunities in Florida’s real estate market
How to qualify for a Jumbo Loan in Florida
Credit score
Generally, a lender is looking for a higher credit score for a Jumbo Loan than conforming loans—a minimum of 700 is typically required, though some lenders may set the bar even higher.
Debt-to-income ratio
The debt-to-income (DTI) ratio is a central factor in determining eligibility for a Jumbo Loan. Most lenders prefer a DTI ratio of 43% or lower, though some may accept higher ratios with compensating factors.
Income and employment history
Lenders will closely scrutinize your income and employment history.
They typically require proof of stable and sufficient income, including tax returns, W-2 forms or 1099s, recent pay stubs, and documentation of any additional income sources.
Down payment
Getting approved for a Jumbo Loan often means a larger down payment than conforming loans.
While conforming loans may allow down payments as low as 3%, Jumbo Loans typically require a minimum down payment of 20%.
Cash reserves
Lenders may require proof of significant cash reserves to qualify for a Jumbo Loan.
These reserves are typically measured in months of mortgage payments and can range from six months to a year or more.
Property appraisal
An appraisal is essential for securing a Jumbo Loan. It determines the property's current market value and helps the lender calculate if the loan amount exceeds the property's value, which should be avoided.
Jumbo Loan limits in Florida: Conclusion
Understanding the limits of Jumbo Loans in Florida is central to making an informed decision about financing your high-value property.
With competitive rates, flexible terms, and personalized service, MIDFLORIDA can help you navigate the Jumbo Loan process and find the best financing solution.
Choose MIDFLORIDA for purchasing your high-value home
If you’re ready to explore Jumbo Loan options in Florida, start by applying with MIDFLORIDA today.
Our team of professional loan officers is here to guide you through every step of the process, ensuring you find the right loan to meet your needs.
