Conventional or jumbo: what changes above the county's conforming limit
A jumbo loan is a conventional loan too. The line between the two is the county's conforming loan limit, which the Federal Housing Finance Agency (FHFA) sets each year. At or under it, a conforming conventional loan is written to Fannie Mae and Freddie Mac guidelines, so that either can buy it. Above it, federal law bars both from buying the loan, and each lender sets its own guidelines. California Mortgage Solutions, an independent mortgage broker in San Luis Obispo, arranges loans on both sides of that line.
Side by side
| The rule | Conventional | Jumbo |
|---|---|---|
| Whose guidelines | Fannie Mae's and Freddie Mac's. A conforming conventional loan is written to the guidelines they publish. | Each lender sets its own. Fannie Mae and Freddie Mac cannot buy a loan above the county's limit, so there is no single rulebook there. |
| Can Fannie Mae or Freddie Mac buy it? | Yes, when the loan meets the guidelines of the one buying it. | No. Their federal charters prohibit both from buying a loan above the county's conforming limit. |
| Loan size | Up to the county's conforming limit: $1,000,500 for one unit in 2026, $1,280,850 for two, $1,548,250 for three and $1,924,100 for four. FHFA sets the limit each year. | Above the county's conforming limit for the home's number of units, up to each lender's own maximum. |
| High-balance loans | San Luis Obispo County is a high-cost area, so its limit sits above the national baseline. Fannie Mae calls a loan subject to a high-cost area's limit a high-balance loan. It is still conforming, but to be sold to Fannie Mae, a high-balance purchase loan has to go through its automated underwriting, Desktop Underwriter, and other requirements can differ. | Does not apply. Above the county's limit, Fannie Mae cannot buy the loan, so its high-balance rules do not reach it. |
| Credit score | No federal minimum. Fannie Mae sets none for a file run through its automated underwriting, and at least 620, with exceptions, for one underwritten by hand. Lenders can set their own. | No Fannie Mae or Freddie Mac minimum applies. Each lender sets its own. |
| After a bankruptcy or foreclosure | Fannie Mae's standard is four years from a Chapter 7 discharge or dismissal, or two years with documented extenuating circumstances. After a foreclosure, it is seven years from the date the foreclosure was completed, or three years with documented extenuating circumstances and added limits on the new loan. | No Fannie Mae or Freddie Mac waiting period applies. Each lender sets its own. |
| Mortgage insurance | Fannie Mae and Freddie Mac can buy a loan that is large against the home's value only with mortgage insurance or another form of protection their federal charters allow. | Fannie Mae's and Freddie Mac's charter rule does not reach a loan neither can buy. Whether a jumbo loan needs mortgage insurance depends on the lender. |
| Ending mortgage insurance | On a one-unit home you live in, the Homeowners Protection Act, subject to its conditions and exceptions, gives you the right to ask for borrower-paid mortgage insurance to be canceled once the loan is paid down far enough against the home's original value, and requires it to end automatically at a later point on the loan's amortization schedule. | Where a jumbo loan carries mortgage insurance, the same federal law applies: on a one-unit home you live in, the Homeowners Protection Act, subject to its conditions and exceptions, gives you the right to ask for borrower-paid mortgage insurance to be canceled once the loan is paid down far enough against the home's original value, and requires it to end automatically at a later point on the loan's amortization schedule. |
Where each one fits
Conventional can fit when
- The loan you need is at or under the county's conforming limit for the home's number of units.
- The loan is above the national baseline but within the county's higher limit, where it can still be a conforming loan.
Jumbo can fit when
- The loan you need is above the county's conforming limit for the home's number of units.
- One jumbo lender's guidelines did not fit your file. Each lender sets its own, so another lender's can differ.
What the two have in common
- Both are conventional loans: neither is insured by FHA or backed by VA or USDA.
- Both are measured against the same line: the county's conforming limit, applied to the amount borrowed, not the price of the home, for the county the home is in and its number of units.
- FHFA says it updates the limits at the end of each November, and that the new limits take effect on January 1.
Questions
What is the difference between a conventional loan and a jumbo loan?
A jumbo loan is a conventional loan too. The line between them is the county's conforming loan limit, which the Federal Housing Finance Agency sets each year. At or under it, a conventional loan can be conforming: written to Fannie Mae and Freddie Mac guidelines so that either can buy it. Above it, their federal charters prohibit both from buying the loan, so it is a jumbo loan, and each lender sets its own guidelines.
What is the jumbo loan limit in San Luis Obispo County?
A loan is jumbo when it is above San Luis Obispo County's conforming loan limit for the home's number of units. The Federal Housing Finance Agency sets that limit each year for homes of one to four units and publishes it for every county. How large a jumbo loan can be is each lender's own rule.
Is a high-balance loan the same as a jumbo loan?
Not in the Federal Housing Finance Agency's sense of jumbo, which is a loan above the county's conforming limit, where neither Fannie Mae nor Freddie Mac can buy it. Fannie Mae calls a loan subject to a high-cost area's limit a high-balance loan, and the Consumer Financial Protection Bureau calls a conforming loan above the national baseline a conforming jumbo loan. Either way, that loan is still conforming, and to be sold to Fannie Mae, a high-balance purchase loan has to go through its automated underwriting, Desktop Underwriter.
What credit score do I need for a jumbo loan?
No Fannie Mae or Freddie Mac rule sets one, because neither can buy a loan above the county's conforming limit, so each jumbo lender sets its own minimum. On the conforming side, Fannie Mae sets no minimum score for a file run through its automated underwriting and, with exceptions, at least 620 for one underwritten by hand; lenders can add minimums of their own.
Can I cancel private mortgage insurance on a jumbo loan?
Where a jumbo loan carries mortgage insurance, the same federal law applies as on a conforming loan: on a one-unit home you live in, the Homeowners Protection Act, subject to its conditions and exceptions, gives you the right to ask for borrower-paid mortgage insurance to be canceled once the loan is paid down far enough against the home's original value, and requires it to end automatically at a later point on the loan's amortization schedule. Whether a jumbo loan carries mortgage insurance in the first place depends on the lender.
Sources
The publications behind the rules above. Where a row says each lender decides for itself, no publication sets that rule. The figures for the county come from the county's loan limit page, with their own sources.
- FHFA conforming loan limits, San Luis Obispo County, read October 14, 2026.
- FHFA, Conforming Loan Limit Values FAQs, updated November 2025, read October 14, 2026.
- Consumer Financial Protection Bureau, Conventional loans, read October 14, 2026.
- Consumer Financial Protection Bureau, How can I find the loan limit for a conforming loan in my county?, read October 14, 2026.
- Fannie Mae Selling Guide, E-3-03, Acronyms and Glossary of Defined Terms: C, read October 14, 2026.
- Fannie Mae Selling Guide, B2-1.5-01, Loan Limits, read October 14, 2026.
- Fannie Mae Lender Letter LL-2025-04, Confirmation of Conforming Loan Limit Values for 2026, read October 14, 2026.
- Fannie Mae Selling Guide, B5-1-01, High-Balance Mortgage Loan Eligibility and Underwriting, read October 14, 2026.
- Fannie Mae Selling Guide, B3-5.1-01, General Requirements for Credit Scores, read October 14, 2026.
- Fannie Mae Selling Guide, B3-5.3-07, Significant Derogatory Credit Events: Waiting Periods and Re-establishing Credit, read October 14, 2026.
- Fannie Mae Selling Guide, B7-1-01, Provision of Mortgage Insurance, read October 14, 2026.
- Fannie Mae's federal charter, 12 U.S.C. 1717(b), read October 14, 2026.
- Freddie Mac's federal charter, 12 U.S.C. 1454(a)(2), read October 14, 2026.
- Homeowners Protection Act of 1998, 12 U.S.C. 4901, Definitions, read October 14, 2026.
- Homeowners Protection Act of 1998, 12 U.S.C. 4902, Termination of private mortgage insurance, read October 14, 2026.
Keep reading:Every loan, comparedThe county's loan limits
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