By Jill Ralph. An announcement by Fannie Mae and Freddie Mac has sweetened the money pot for home buyers and may help boost homeownership. For 2003, jumbo mortgages will start at $322,700 (for first mortgages on single-family homes) and $413,100 (for multifamily units). Both figures represent a significant increase from 2002. Any mortgage for less than $322,700 or $413,100, respectively, will be considered a conforming mortgage and will probably have a lower rate than a jumbo mortgage.
Consider how this change affects a home buyer who takes out a $322,000 mortgage for 30 years. In 2002, that's a jumbo mortgage; in 2003, it's considered conforming. At a conforming rate of 6.19 percent and a jumbo rate of 6.47 percent, the home buyer would save $21,186 in principal and interest over the life of the loan, a significant incentive for home buyers.
In October, the Federal Housing Finance Board calculated the average price of a single-family home in the United States: $235,700.
Published in BIG BUILDER Magazine, February 2003
