For starters, depending on your income, you may be able to buy a higher priced home.
Denver’s maximum conforming loan limit is now $575,000, which is up from $529,000. The Denver counties enjoying this increase are Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park.
Boulder is now $644,000 in 2020 up from $578,450 the previous year.
Glenwood Springs is highest cost county in Pitkin county and was increased to $679,650.
According to the Colorado Association of REALTORS®, home sales have increased by 7.9% year to date in the Denver Metro Region with an average sales price of $486,695 which is below the new limits.
However, these loans are available for those putting 5% down or more. Here’s three examples of how it would work.
Home for sale in The Trails at Hiwan: $729,000 (Evergreen’s median value is $646,824 per Zillow in 2020)
1.) Jefferson County conforming limit: $575,000
Down Payment for a conforming loan: $154,000 (or 21%) to get a $575,000 loan. You can also apply for a first loan of $575,000 and a 2nd loan
2.) Home price at $557,000 in Denver
With a 5-percent down payment of $28,000, this will get you to a loan balance of $529,000. Keep in mind, there are 5 or 10-percent down jumbo programs as well for higher prices.
3.) An interested home buyer found a two-story home in Boulder, Colorado where the seller is asking $900,000. The county limit is $644,000. The buyer can put $264,000 down (or get a 2nd loan) and finance the rest using a conforming first mortgage loan.
If the down payment is too much, then you can still get a jumbo mortgage with a 5-or-10- percent down payment.
Differences Between Conforming and Jumbo
Borrowers are required to have at least a 620 middle FICO credit score for conforming loans. However, they may need a 640 or higher score based on their down payment and debt-to-income ratio.
The difference in rates for jumbo and conforming mortgages is very little — at just 1/10th of a percent, based on a recent USA survey and at Bankrate. However, conforming mortgage rates, which usually vary by .25 to .5 percent between competing lenders, rates for a jumbo mortgage can differ quite a bit from one mortgage company to the next. So, it all depends on the company.
Debt-to-income (DTI) ratios for conforming loans can reach 50 while a jumbo loan is commonly limited to 43. When a jumbo loan program does allow a maximum of 50, the interest rate is usually higher due to added risk.
Closing costs for conforming loan amounts may offer the borrower better options when it comes to potential credits for closing costs.