Jumbo vs. Conforming Loans
How do you get a $560k house for the cost of a $525k house?
No, it has nothing to do with negotiation, bargain hunting, or otherwise outmaneuvering home sellers.
Rather, it’s strictly a financing play.
Namely, by moving up just a little in price, Buyers today can avail themselves of cheaper jumbo loans (over $417k), and effectively end up with the same monthly payments.
Example
So, a Buyer who buys a $525k house with 20% down and a 4.3% conforming 30 year loan would have a monthly payment (principal and interest) just under $2,100.
Meanwhile, a Buyer who buys a $560k house with 20% down and a 3.75% jumbo loan would have a monthly payment (principal and interest) . . . . . just under $2,100.
The one caveat to the above: the second Buyer would have to pony up another $7k, to keep the same 20% down payment at the higher purchase price.
They’d also be on the hook for fractionally larger annual insurance and property taxes on the more expensive home.
