Home buyers in more expensive real estate markets, like some in New Jersey, often have to use jumbo mortgage loans when buying a house. Which begs the question: What is considered a jumbo loan in New Jersey? What’s the threshold or limit?

Depending on the county where you plan to buy a home, a jumbo loan might be anything above $424,100 or $636,150. See the next section for a county-by-county breakdown.

What Is a Jumbo Loan in New Jersey?

By definition, a jumbo loan is when the amount being borrowed exceeds the conforming loan limits used by Fannie Mae and Freddie Mac. These limits are established by the Federal Housing Finance Agency (FHFA0, which regulates Fannie and Freddie.

Loan limits are based on median home values, which means they can vary from one county and region to the next. When a person borrows more than these limits, it is considered to be a jumbo mortgage product.

So let’s get specific. What is considered a jumbo loan in New Jersey? Depending on where you live, the conforming limit for your county is either $424,100 for $636,150 (as of 2017). So a jumbo mortgage would be anything above those amounts. These are referred to as the “floor” and “ceiling” limits.

Here’s how it breaks down by county:

• Floor areas: The conforming loan limit is $424,100 in the following counties: Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer, Salem and Warren. In these New Jersey counties, a jumbo loan is anything larger than $424,100.
• Ceiling areas: Due to higher home prices, the loan limit is $636,150 in the following counties: Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex and Union. Anything above that amount will be considered a jumbo mortgage loan.

Learning the Lingo

Some borrowers refer to the “jumbo loan limit” for New Jersey, but this is something of a misnomer. There isn’t a hard limit for the amount a person can borrow, once they have exceeded the conforming limit. So, technically speaking, there is no jumbo loan limit for New Jersey.

These oversized, non-conforming mortgage loans can rise well over $1 million in some cases. The maximum amount generally depends on the borrower’s income, debts, and other factors.

The real “limit” is applied to conforming loans, which are those that can be sold to Fannie Mae and Freddie Mac via the secondary market.

How to Apply for an “Oversized” Mortgage

A New Jersey jumbo loan is essentially an “oversized” mortgage product that exceeds the limits mentioned above. Since there is a larger amount being borrowed, the qualification requirements can be a bit more strict when compared to a smaller loan amount. But the overall application process is very similar.

Here are the initial steps in the process:

• Contact us with any questions you have about qualifying for a jumbo loan in New Jersey.
• Complete a standard application form (Uniform Residential Loan Application).
• Provide additional documents relating to your income, assets and debts.

We can even pre-approve you for a conforming or jumbo loan in New Jersey. This financial “pre-screening” process can benefit you in several ways. Once you’ve been pre-approved for a certain amount, you can narrow your housing search to a specific price range.

Being pre-approved by a mortgage lender could also make sellers more inclined to accept your offer, when compared to someone who has not been pre approved.

Let’s talk: This article answers the frequently asked question, what is a jumbo loan in New Jersey? This is just a basic overview of conforming loan limits and jumbo mortgage products. Please contact us if you have questions about applying, or any other financing-related questions.