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Super Conforming Loan: How It Works And What To Know

5-Minute Read
Published on June 7, 2023
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Looking to buy a home in an expensive part of the country, like New York City or Los Angeles? You might need to a larger mortgage loan to finance the purchase of a home in your ideal area.

You can choose from several types of home loans when financing your home. Most buyers, though, prefer what are known as conforming loans, mortgages that meet all the requirements to earn backing from the government-sponsored entities (GSEs) of Freddie Mac and Fannie Mae. That’s because conforming loans tend to come with lower interest rates.

But if you’re buying a more expensive home, you might be forced to take out a jumbo loan. These are mortgages for an amount higher than the conforming loan limit in your part of the country. The conforming loan limit is higher in areas of the country deemed more expensive. Unfortunately, jumbo loans are typically more expensive, with lenders charging borrowers higher fees and interest rates.

In these high-cost areas, you can apply for super conforming loans without worrying about the extra costs that come with jumbo mortgages.

What Is A Super Conforming Loan?

Super conforming loans are mortgages for borrowers in high-cost real estate areas. These high-cost or high-balance mortgages offer borrowers financing in expensive markets.

Each year, the Federal Housing Finance Agency (FHFA), the government body that oversees Freddie Mac and Fannie Mae, sets conforming loan limits for counties throughout the country. As part of this process, the agency also identifies

In these higher-cost areas, buyers can take out larger mortgage loans and still qualify for a conforming loan. They won’t have to take out a jumbo loan.

Understanding How Super Conforming Mortgages Work

Like traditional conforming loans, super conforming loans meet the guidelines set by Freddie Mac and Fannie Mae. The only difference is the size of these loans. As their name suggests, super conforming loans have higher limits than do standard conforming mortgages.

Super Conforming Loan Limits

In most parts of the country in 2023, home buyers can take out a mortgage loan for one-unit homes of up to $726,200 and still end up with a conforming mortgage loan. That’s because the FHFA this year bumped the conforming loan limit to that figure.

In higher-cost areas of the country, though, buyers can apply for a mortgage of up to $1,089,300 for one-unit homes and still meet Freddie Mac's and Fannie Mae's guidelines. These are known as super conforming loans.

These higher-cost areas of the country include Alaska, Hawaii, Guam and the U.S. Virgin Islands. Other parts of the country, especially expensive metro areas, also feature higher conforming loan limits. In Santa Barbara County in California, for instance, the conforming loan limit is $805,000. In Garfield County, Colorado, this limit is $948,750.

If you borrow an amount over the limits for your specific area, you’ll need a non-conforming loan, one that could come with higher interest rates and fees.

Super Conforming Mortgage Rates

The interest rate you’ll get with a super conforming mortgage will vary depending on a host of factors. But just because your loan will be a larger one, it doesn’t mean that your rate will be high.

Mortgage rates for super conforming loans will vary depending on the strength of your credit score and debt-to-income ratio.

Most lenders consider FICO® credit scores of 800 or higher to be excellent ones. If your score is at or near this level, you’ll increase your odds of qualifying for a lower interest rate.

Your debt-to-income ratio measures how much of your gross monthly income that your monthly debts, including your mortgage payment, consume. Most lenders prefer that your monthly debts equal no more than 43% of your gross monthly income. If you can keep your debt-to-income ratio at or below that percentage, you again increase your odds of nabbing a lower interest rate.

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Super Conforming Loan Vs. Jumbo Loan

Super conforming loans and jumbo loans are not the same thing. A jumbo loan is a mortgage for any loan amount that is higher than the conforming loan limits in your area.

If the conforming loan limit in your area is $726,200, a jumbo loan will be any mortgage higher than that amount. If the conforming loan limit in your part of the country is $1,089,300, a jumbo loan is a mortgage for more than that figure.

What qualifies as a jumbo loan, then, depends on where you live and what the conforming loan limits are in that area.

A jumbo loan might be necessary depending on the cost of the home you’re buying. But these loans do come with some negatives. Because lenders are taking on more risk by loaning you so much money, you’ll usually have to come up with a larger at least 10% of a home’s purchase price. Some lenders might require a down payment of up to 25% of a home’s sales price.

Again, because lenders are taking on more risk, you might pay higher interest rates for a jumbo loan than you would with a conforming mortgage.

Should You Get A Super Conforming Loan?

Depending on where you live and the price tag of the home you want to buy, you might have no choice but to apply for a super conforming mortgage loan. If you live in high-cost parts of the country, you may be able to apply for a mortgage for up to $1,089,300 and still qualify for a super conforming loan. Go above that amount even in high-priced housing markets and you’ll instead need to take out a jumbo loan.

Super Conforming Loan Advantages

The main advantage of a super conforming loan is that it is not a jumbo loan.

  • Super conforming loans are available in parts of the country where home prices are especially high.
  • You’ll generally need a lower down payment and you’ll have to qualify for lower interest rates if you take out a conforming or super conforming loan instead of a jumbo mortgage.

Super Conforming Loan Disadvantages

This doesn’t mean that super conforming loans don’t come with negatives.

  • Your interest rate on a super conforming loan might be higher than the rate on a traditional conforming loan just because the sheer size of these loans means that lenders are taking on more of a risk.
  • You’ll also face a larger monthly payment because of the higher amount you’re borrowing. Even with a longer term, such as 30 years, you’ll still need to pay a significant amount each month to pay off your loan in time.

Qualifying For Super Conforming Loans

You’ll need to meet the same requirements for a super conforming loan as you would with any conforming mortgage. You’ll need a solid credit score, though how high this score needs to be will vary by lender. Most lenders will require a credit score in the mid-600s at a minimum. Lenders will look at your debt-to-income ratio to make sure your monthly debts aren’t eating up too much of your gross monthly income. You’ll also need steady employment that generates consistent income.

The Bottom Line

Those buying all but the most expensive homes will generally qualify for a conforming or super conforming loan. When you begin your search for a new home, speak with your real estate agent about the conforming loan limits in the communities in which you want to buy. This way you’ll know before making an offer whether you’ll need a conforming, super conforming or jumbo loan to finance your home purchase.

If you are ready to weigh your mortgage financing options, get started online today with us and move one step closer to buying your dream home.

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Dan Rafter

Dan Rafter has been writing about personal finance for more than 15 years. He's written for publications ranging from the Chicago Tribune and Washington Post to Wise Bread, RocketMortgage.com and RocketHQ.com.