What’s the Difference Between a Conventional and a Jumbo Loan?

Have you ever wondered about the difference between a conventional and a jumbo loan? Not sure where conforming loan limits fit in? Ready to buy a home and curious about what makes sense for your situation?

The Potempa Team and OneTrust Home Loans give you access to a variety of home loan products. Conventional loans and jumbo loans are two of the most popular options for prospective home buyers. If you’re someone whose home purchase budget puts you near the 2023 conventional loan limit for your state, read on to learn more about these two loan types!

What is a Conventional Loan?

A conventional loan is a type of mortgage that meets the underwriting requirements of Fannie Mae or Freddie Mac. Previously, a conventional loan required the borrower to put 20% down, but recent changes have allowed for lower down payments of just 3-5% in some cases, making conventional loans more accessible to first-time home buyers. Conventional loans are by far the most popular type of home loan, comprising nearly 70% of all home loans in the United States! In addition to their specific qualification guidelines, conventional loans cannot exceed the annual conforming loan limits set by the FHFA, which vary from state to state.

What is a Jumbo Loan?

A jumbo loan is a type of non-conforming mortgage loan that is used to finance higher-cost properties that exceed the conforming loan limit set by Fannie Mae and Freddie Mac. These loans have more stringent underwriting procedures and typically require a higher down payment than a conventional loan. Jumbo loans offer several advantages, such as access to more money, competitive interest rates, and greater flexibility in choosing a mortgage that works best for the borrower, including both fixed-rate and adjustable-rate options.

What’s the Best Loan Choice Based on Your Budget?

There are many factors that can affect your choice of home loan. When you begin the pre-approval process and meet with a member of the Potempa Team, we will help you understand all options that are available to you based on your history, financial assets, and budget. If you are pre-qualified to buy a home right at or slightly above the conforming loan limit for your state, you may find yourself weighing the differences between a conventional and a jumbo loan.

If you have the means to qualify for both loan types, you’ll also want to consider what you ultimately want to buy. Having your heart set on buying in a particular neighborhood that would require you to use a jumbo loan to finance may sway your decision. However, if you’re willing to be flexible and look at alternative communities and home options, a conventional loan may be a great fit still. No matter what, our team will be able to answer all your questions so you can make an informed decision to select the right home loan for you.


Ready to begin the pre-approval process? Click here to access our new online application portal. The Potempa Team and OneTrust Home Loans are looking forward to helping you purchase your dream home this year!

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