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What Is a High-Balance Loan?

A high-balance loan — also referred to as a conforming high-balance loan or a super-conforming loan — is given to home buyers in high-income areas. It exceeds national conventional loan limits but meets local loan limits. Unlike jumbo loans, high-balance loans are backed by Fannie Mae and Freddie Mac. High-balance loans vary by county, and limits are set by the Federal Housing Finance Agency (FHFA). If you’re looking for a home in a high-income area, you may qualify for a high-balance loan. In this post, we’ll cover everything you need to know about high-balance loans.

How Are High-Balance Loan Limits Calculated?

In most of the U.S., the 2021 maximum conforming loan limit (CLL) for one-unit properties is $548,250. It will increase in 2022 up to a base of $625,000. The maximum conforming loan limit does vary from county to county and may be higher depending on median home value. In counties where 115% of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline loan limit.

What Are the Qualifications for a High-Balance Loan?

To qualify for a high-balance loan, applicants must:

  • Have a credit score of at least 620
  • Be able to make a down payment of 5% of the property’s appraised market value
  • Have a debt-to-income (DTI) ratio of lower than 45%

Special Criteria to Qualify for a High-Balance Loan

  • Must be applying for a loan in a high-cost area

High-Balance vs. Jumbo Loans: The Differences

A jumbo loan is a non-conforming loan that may be taken out if a home buyer is interested in purchasing an expensive or luxury home or taking out a large mortgage in a highly competitive market. Jumbo loan applicants should be in a high-income earning bracket and have a credit score of 700 or more. Jumbo loan interest rates and down payments are typically higher than conforming loans and requirements are stricter, which may make it more challenging to qualify for.

Requirement High-Balance Loan Jumbo Loan
Property type High-cost counties or areas Luxury home or property located in highly competitive area
Loan Limit $822,375 (in high-cost areas) None
Minimum down payment 5% of the property’s appraised market value At least 10%; some lenders may require up to 30%
Minimum credit score 620 700
Mortgage insurance Required, amount varies based on loan factors None
Debt-to-income ratio Maximum 45% Maximum 36%
Cash reserves None but can be conditioned on case by case basis 6 to 12 months’ worth of monthly payments available

Is a High-Balance Loan Right for You?

Here are some reasons to choose a high-balance loan:

  • If you’re looking in a high-income area
  • If you want to qualify for a lower mortgage interest rate
  • Your credit score is between 620 and 699


When to Choose a Jumbo Loan over a High-Balance Loan

Jumbo loans typically have more flexibility for loan rates and terms. You may want to choose a jumbo loan if:

  • You are not in a high-cost area (and won’t qualify for a high-balance loan)
  • You are a high-income earner
  • You have extremely good credit
  • You are financing a luxury home
  • You are financing a home in a highly competitive area
  • You have a credit score of 700 or more

FAQs about High Balance Loans

Q: What is a high-balance loan?

A: A conforming high-balance loan exceeds national conforming loan limits but meets local loan limits. These are common in high-income areas where local loan limits exceed the national limit.

Q: Do I qualify for a high-balance loan?

A: There are many factors that contribute to qualifying for a high-balance loan, but generally you will qualify if you are looking in a high-income area and have a credit score of 620 or higher.

Q: What is a jumbo loan?

A: A jumbo mortgage is a loan exceeding the loan limit set forth by Fannie Mae and Freddie Mac. Jumbo loans are popular with home buyers interested in expensive or luxury homes or those looking to get a large mortgage in a competitive market.

Q: What’s the difference between a jumbo and high-balance loan?

A: A jumbo loan is not backed by Fannie Mae and Freddie Mac and may be harder to qualify for. High-balance loans are limited to high-income areas, while jumbo loans are not. There is no loan limit on a jumbo loan. Jumbo loans borrowers are typically in high-income earning brackets and have a credit score of 700 or more.

Q: What is a conventional loan?

A: A conventional loan is one that conforms to the guidelines set by Fannie Mae and Freddie Mac.

Q: What is a conforming loan?

A: A conforming loan is a type of conventional loan and is typically easy to get approved for.

Q: What is the conventional loan limit?

A: The conventional loan limit in most counties is $548,250. The maximum limit for higher-income counties is $822,375.

Q: What is a super-conforming loan?

A: A super-conforming loan is another name for a conforming high-balance loan.

Roger Odoardi

Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.