Conforming loans versus jumbo loans: Here’s how you can get lower mortgage rate on bigger loan


SAN FRANCISCO (KGO) — In mortgage lending there is a bright line you need to understand: There are conforming loans — these are loans with a cap of about $650,000 — and jumbo loans, which are for any amount higher than that.

Usually, jumbo mortgages have an interest rate of about half a percent more than a conforming loan, but not now. If you know where to look, jumbos are on sale.

Joanna DeCelles just bought her dream house.

“I got really, really lucky, I’m really grateful,” she told 7 On Your Side.

Her son, Zane, is making the home his own, by performing perfect cannonballs into the pool.

DeCelles found the right home, but finding the right mortgage wasn’t easy.

“Well, I’m a full time mother,” she says, “so I’m not working and generally to have a mortgage you need to have a job so that was a huge, huge problem.”

She says her first loan officer failed to get her a mortgage, then she got together with Solidify Mortgage Advisors and got a loan.

Now Solidify is passing along information on an odd quirk in the market, an open secret in mortgage circles, that could help you pay less for your mortgage.

7 On Your Side asked co-owner Dusty Broderick about getting a deal: “If you want to save money, take out a bigger loan?”

Broderick answered, “Yeah, and that’s ironic.”

Broderick says banks are offering lower interest rates to bigger borrowers.

He explains the math: “If you’ve got a loan amount underneath $647,200, your rate’s probably around five and a half. If it’s above that even by $1, you might be looking at four and a half, right now, believe it or not.”

Now, two things to keep in mind. First, it is generally banks making these low offers on jumbo loans. Second, if you are looking at a conforming loan, consider buying a more expensive home or making a lower down payment.

“Anecdotally I’ve seen some banks saying, ‘Hey, just make the loan amount $647,201,'” Broderick tells 7 On Your Side, “‘and we can give you a point lower rate.'”

So spending just one more dollar could save you tens of thousands of dollars over the life of the loan. This is not expected to last. So if you are looking for a mortgage now, be like Zane, and just jump in!

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

Have a question for Michael and the 7 On Your Side team? Fill out the form HERE!
7OYS’s consumer hotline is a free consumer mediation service for those in the San Francisco Bay Area. We assist individuals with consumer-related issues; we cannot assist on cases between businesses, or cases involving family law, criminal matters, landlord/tenant disputes, labor issues, or medical issues. Please review our FAQ here. As a part of our process in assisting you, it is necessary that we contact the company / agency you are writing about. If you do not wish us to contact them, please let us know right away, as it will affect our ability to work on your case. Due to the high volume of emails we receive, please allow 3-5 business days for a response.

Copyright © 2022 KGO-TV. All Rights Reserved.

Show some Love^^