May 29, 2021

What is the Jumbo Loan Limit in Tacoma?

Looking to purchase or refinance a home in Tacoma, Washington this year? What is the jumbo loan limit in Tacoma? How might it affect your loan?

Tacoma may be known for having cheaper housing than Seattle. That means many home buyers and homeowners may find they hit a roof with many mortgage lenders when looking for bigger loans. How could this impact you, your borrowing and financial plans?


Bigger Home Prices, Bigger Loans


Despite, or more likely because of all of the mayhem of the past year Tacoma real estate has been on fire. Demand for local properties and prices have just been going up, and fast. 

There have been fewer house listings and more buyers, driving up house prices. Home buyers and real estate investors are increasingly being drawn to the City of Destiny. Many are fleeing more expensive chaotic cities like Seattle and San Francisco in exchange for less expensive destinations. 

At the same time many are seeking to get their money out of the stock market, cryptocurrency and bank accounts, and into the safety of real estate as new taxes hit, and bubbles pop.

Others are just seeking to upgrade to a bigger place and more value for money. 

As a result, Zillow reports the average home price in Tacoma has risen almost 18% over the past year, to $425,987. That’s around an $80,000 increase in equity for existing homeowners in just the last 12 months alone. 

Yet, Tacoma home prices are still around just half the cost of Seattle’s. 

With today’s low interest rates and a highly litigious and increasingly highly taxed society it makes more sense to maintain a mortgage on your property. Even if you could pay all cash for a home or pay it off.  

Between high rents, and landlords now too afraid to rent out their properties, owning not only makes more sense, but is a must for many individuals and families now. 

The big question is, how will this all influence which mortgage loans you can get, which is the right loan for you, and how to get the best mortgage deals. 


Conventional Versus Jumbo Home Loans


The traditional staple American home loan is the conventional loan. This is the typical, average loan most think about when getting a mortgage to buy a house or refinance. There are also government backed mortgage programs, including VA, USDA and FHA home loans. 

To qualify for these house loans, your loan amount has to ‘conform’ in addition to your credit and income. The maximum conforming loan limits can change every year. As of 2021, the maximum conforming loan amount was raised again. The FHFA raised the national conforming loan limit to $548,250.

Fortunately, there are special provisions for those buying and refinancing homes in higher cost areas. Tacoma is now considered one of those. In Pierce County, Washington you can now borrow up to $776,250 on a single family home, townhouse or condo, while still having access to all of the best loan programs. That’s more than $200,000 over most of the country. These include loans with features like 100% financing, and no down payments, as well as fantastic interest rates. 

Another great exception to the traditional conforming loan limit applies to VA home loans. They have removed these loan limits, enabling veterans and their family members to buy more expensive homes, with all the benefits designed to come with these mortgage loans.

If you need to borrow more than $776,250 in one loan, then you will be in jumbo mortgage loan territory. When available these larger types of loans also typically have their own underwriting and qualification rules, and loan terms.


What Is The Jumbo Loan Limit In Tacoma?


This year jumbo mortgages start at around $776,251. 

There is no official upper limit to these loans. Though individual banks and lenders have their own parameters. Mortgage lenders regularly advertise jumbo home loans up to $2M. Though in some circumstances you can get loans for tens of millions of dollars. 

Typically when you start hitting these levels of numbers your mortgage broker will be sourcing funds directly through capital markets and Wall Street. 

Although many jumbo loan borrowers are wealthy and sophisticated, lending such big sums to any one individual can be a great risk. In turn this can come with stricter underwriting requirements, more verifications, and sometimes higher interest rates.


How Are Jumbo Mortgage Loans In Tacoma Different?


Financial markets are constantly changing. Jumbo mortgages are sometimes harder to get, but that doesn’t always have to be the case. 

When applying for a jumbo mortgage loan you may run into some of these differences: 

  • Payment shock as a factor in being approved
  • Bigger down payment requirements
  • Second appraisals and appraisal reviews to confirm the value
  • Requests for additional tax returns or bank statements to verify income and assets


Alternatives To Jumbo Mortgages


Jumbo mortgage loan borrowers often have more complicated finances. This means that you may not feel you fit into a traditional bank underwriting mold. Though you can still get an attractive home loan.

A great Tacoma mortgage broker can help you evaluate how to obtain certain exceptions to tougher underwriting guidelines. 

Creative structuring can help optimize your loan and the experience as well. For example, breaking up your loan with an 80% first position mortgage, and 10% second position mortgage. This scenario would enable you to make only a 10% down payment and get an even better deal on the bulk of your financing.

Though thanks to current conforming loan limits, and Tacoma’s low property prices, you can buy a house worth at least $860,000, with 10% down, and still be under the conforming loan limit, for the best rates and easiest process.


Summary


It’s important to know the jumbo loan limits, which move you up into a different tier of loan. There really is no ceiling. Though staying at or under the conforming limit may lead to a much easier mortgage experience. Talk to your Tacoma mortgage broker to understand the differences, and structure a great home loan that you are going to love.

About the author 

Joe Tafolla

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