What are jumbo loans?
Great question anonreader.
The term Jumbo comes directly from Wall St to identify and classify loans that exceed the conforming loan limit of $417,000 in most states. In other words, a conforming loan is anything under $417,000 because it will be purchased by both Fannie Mae and Freddie Mac. Thus 'conforming' to their guidlines.
Back in February 2008 as part of the Ecnomic Stimulus package the Government decided to raise the conforming loan limits temporaily for high costs areas to 125% of the median home price. Simply put, in counties where the median home price is $333,600 the conforming loan limit will stay at $417,000. In other places like Los Angeles County, the conforming loan limit was raised to $729,750.
The temporary higher conforming limits are set to expire at the end of this year and many investors are not taking files after a certain point within the next few weeks. However, there is talk about the conforming loan limit being raised to $650,000 permantly but currently this is just talk.
So for now, after the end of the year jumbo loans will be loans over $417,000 because they will no longer be purchased by Fannie Mae and Freddie Mac unless we hear otherwise.
In the short meantime, if you want to check your counties conforming loan limit you can simply visit https://entp.hud.gov/idapp/html/hicostlook.cfm Type in your County's name and select Fannie/Freddie underneath the Limit Type.