California is home to the largest number of high-cost living counties in the United States. High property values in these areas generally result in larger-than-average loan amounts. This has a major impact on mortgage financing in California since annual loan limits are set on a national stage. All California residents who are looking to use mortgage financing to purchase (or refinance) a home should be familiar with how this impacts them.
It is important to understand that there are a total of three different tiers of financing when discussing mortgage loan amounts: Conforming, High Balance, and Jumbo. Conforming loans are those with a loan amount that falls at or below the national limit. High Balance loans are those which fall above the national limit but below a set county-adjusted secondary limit. Jumbo loans are those which are above both the national and county-adjusted limits.
The national conforming loan limit in 2023 is $726,200. The highest county-adjusted loan limit in 2023 is $1,089,200. This means if you are seeking a loan amount for somewhere between $726,200 – $1,089,200 you will fall into either the high balance or jumbo category based on the county in which the property is located. An additional note is that some counties have absolutely no adjustment and will automatically default to Jumbo.
In general, each step up from conforming to high balance to jumbo makes qualifying requirements for a mortgage much more restrictive. Typically, your interest rate will also increase for each higher tier. Recently, however, jumbo financing has been as competitive as the others.
It is important that you speak to an experienced mortgage loan originator who is aware of these loan limits as it will ensure you get the best possible financing. Feel free to give us a call at 760-930-0569 and one of our Mortgage Loan Originators will be happy to answer any questions you may have and help you explore your options.