Phoenix, AZ Jumbo Loan Threshold Increased for 2018

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The conforming loan limit for Phoenix, Arizona was increased from 2017 to 2018. That means that the Phoenix jumbo loan threshold will increase as well. In 2018, a mortgage that exceeds the conforming limit of $453,100 will be considered a jumbo loan in Phoenix.

Phoenix Jumbo Loan: Anything above $453,100

In November 2017, the Federal Housing Finance Agency (FHFA) announced that it was going to increase conforming loan limits for most counties across the United States. The limits were raised for all but 71 counties, in response to significant home-price gains that occurred during 2017. This means that the conforming limit and jumbo loan threshold for Phoenix, Arizona will be higher in 2018 than it was in 2017.

Here are the 2018 conforming loan limits for Maricopa County in 2018:

One-unit Two-unit Three-unit Four-unit
$453,100 $580,150 $701,250 $871,450

By definition, a “jumbo” mortgage loan is one that exceeds the size limits used by Freddie Mac and Fannie Mae. These “oversized” home loans are essentially too big to be sold into the secondary mortgage market via Freddie Mac or Fannie Mae. As a result of the higher amount being borrowed, some lenders have stricter qualification criteria for jumbo mortgage loans.

In Phoenix, a jumbo loan is anything larger than $453,100, for a one-unit property.

Median Home Value in Phoenix Is Below These Limits

According to recent real estate reports, the median home value for Phoenix, Arizona was around $220,000 as of November 2017. The median for the broader metro area is a bit higher, at around $245,000 when this article was published. Both of these numbers are well below the conforming loan limit for Maricopa County, which is $453,100.

Given this fact, you might wonder why housing officials raised the conforming loan limits (and jumbo loan threshold) for Phoenix, Arizona, from 2017 to 2018. The limits went up for Phoenix simply because the FHFA raised the “baseline” amount for the nation as a whole.

This means that the average home buyer in Phoenix should have plenty of homes to choose from, without venturing into jumbo loan territory.

Lower Rates for Bigger Mortgages?

It might seem counterintuitive, but the average mortgage rates for jumbo loans in Phoenix and across the country tend to be lower than the average rates for smaller conforming loans.

It didn’t always used to be this way. A few years back, jumbo loans typically had higher rates. But due to shifting demand from investors, and other factors, Phoenix jumbo loans have had lower average rates over the last couple of years.

Here’s an example. The weekly application survey conducted by the Mortgage Bankers Association showed the following, for the week ending November 24, 2017:

“The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged from the week prior at 4.20 percent. 
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) decreased to 4.14 percent from 4.16 percent.”

Granted, rates can vary from one borrower to the next for a number of reasons. On average, however, jumbo loans tend to have lower rates than conforming. This might come as a surprise to many people.

Disclaimer: This article includes conforming and jumbo loan limits for Phoenix, Arizona in 2018, and is based on information provided by official government sources. We make every effort to ensure the accuracy of our content. But there is always a chance that errors might occur. To learn more about loan limits, refer to the Federal Housing Finance Agency’s website.