In this hypothetical, the applicable conforming loan limit for the county and property is $766,550. The requested conventional first mortgage is $812,000. Why is it classified as jumbo by loan size?
Correct Answer
C) It exceeds the stipulated conforming limit by $45,450
C. It exceeds the stated limit by $45,450. $812,000 − $766,550 = $45,450. The applicable loan-size limit determines this classification; a good credit profile does not increase that limit. Scope and exceptions: The supplied limit is hypothetical, not a current nationwide limit. Actual limits depend on year, location and units. Jumbo classification alone does not prove a higher rate or explain a particular quote; compare actual terms. Source: Conforming and jumbo loan categories — https://www.consumerfinance.gov/owning-a-home/conventional-loans/
Why This Is the Correct Answer
C. It exceeds the stated limit by $45,450. $812,000 − $766,550 = $45,450. The applicable loan-size limit determines this classification; a good credit profile does not increase that limit. Scope and exceptions: The supplied limit is hypothetical, not a current nationwide limit. Actual limits depend on year, location and units. Jumbo classification alone does not prove a higher rate or explain a particular quote; compare actual terms.
Why the Other Options Are Wrong
Option A: Every mortgage above $800,000 is jumbo regardless of the applicable local limit
It substitutes an invented nationwide $800,000 boundary.
Option B: Any loan with LTV above 80% is classified as jumbo
LTV and loan-size classification are different measures.
Option D: It is conforming whenever the borrower has strong credit
Credit quality does not waive the size boundary.
Exam Tip
Classify size using the applicable limit, then evaluate pricing separately.
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