Should You Wait for 2026 Loan Limits to Refinance a Jumbo Mortgage?

Should You Wait for 2026 Loan Limits to Refinance a Jumbo Mortgage? What I Tell California Clients

I hear this question a lot from California homeowners who bought in the last 12 to 36 months. The story is usually the same. They locked a jumbo 30-year fixed in the 7 percent range, they watch the news about rate cuts, and they are hoping that conforming loan limits rise enough to let them refinance out of jumbo pricing.

A recent couple who reached out to me described it like this: “If conforming limits rise in 2026, we might only need to pay down a small portion to get into a conventional loan. Should we wait for early 2026 and try to land under 6 percent, or refinance now if we can get a meaningful drop today?”

This is a smart question. It is also easy to overthink because it involves multiple moving parts: loan limits, rates, home value, credit, timing, and closing costs. Here is how I break it down for clients so the decision is based on math and goals, not headlines.

First, confirm what the 2026 conforming loan limits actually are

Conforming loan limits are set annually by the Federal Housing Finance Agency (FHFA) and determine the maximum loan size that can be acquired by Fannie Mae and Freddie Mac. For 2026, the baseline conforming loan limit for a one-unit property in most of the United States is $832,750. The high-cost area ceiling is higher, up to $1,249,125 for a one-unit property, depending on the county.

In California, many counties are high-cost, so your local conforming limit may be well above the baseline. That means some borrowers assume they must stay jumbo when they actually qualify for high-balance conforming today. The only way to know is to check the county limit, your current balance, and your current estimated value.

The biggest myth: You need a 1 percent rate drop to refinance

I never use a one-size-fits-all rule like “wait for rates to drop a full percent.” It is not how refinance decisions should be made.

What matters is your break-even point. Break-even is how long it takes for your monthly savings to cover the closing costs. On a large California loan balance, a smaller rate improvement can still create meaningful savings and a fast break-even. On a smaller balance, even a bigger rate drop may not be worth the costs.

Mortgage rates do not follow the Fed the way people think

Another theme I see is homeowners trying to time refinancing based on expected Fed cuts. The Fed influences short-term rates, but mortgage pricing is driven heavily by the bond market, including the 10-year Treasury and mortgage-backed securities spreads. That is why mortgage rates can rise even during periods when the Fed is cutting.

So if your plan depends on “two more Fed cuts equals sub-6 mortgage rates,” treat that as a possibility, not a guarantee.

Why waiting for 2026 loan limits can be reasonable, and when it is not

Waiting can be reasonable when all of these are true:

• You are confident your home value will hold or increase, so your loan-to-value stays favorable.
• You can pay down principal to fit under the right limit without draining reserves.
• Your credit profile is already strong and stable, so you are not expecting major improvements later.
• You can comfortably afford today’s payment without stress.

Waiting becomes risky when your strategy stacks too many “ifs,” like hoping rates drop below a specific number, limits rise exactly as forecast, and your home value stays strong at the same time. If cash flow is tight, the cost of waiting can be very real, especially on a 7-plus percent jumbo rate.

Jumbo vs conforming: sometimes jumbo pricing is not worse

Here is something most homeowners are surprised by: jumbo rates are not always higher than conforming. In certain market conditions, jumbo pricing can be competitive, especially for high-credit borrowers with strong assets and lower loan-to-value.

That is why the “I must refinance into conforming to get a better rate” assumption is not always true. The right move is to price both scenarios: jumbo refinance and conforming or high-balance conforming refinance, then compare the net cost and monthly savings.

The two-step strategy I often run for clients: save now, stay flexible later

A common answer is not “refinance now” or “wait until 2026.” It is “capture savings now with minimal friction, then keep the option to refinance again if the market improves.”

This is where a low-cost or lender-credit refinance can help. People call it a “no-cost refinance,” but what that typically means is the lender provides credits to offset some or all closing costs in exchange for a slightly higher rate than the absolute lowest available. Done correctly, it can shorten your break-even point dramatically and reduce regret if you refinance again later.

The right way to evaluate it is simple: compare your current payment versus the new payment, confirm whether the loan amount increases, and verify the total credits and fees on the Loan Estimate. If the savings are meaningful and the cost is truly minimal, you may be able to stop the bleeding now and still take advantage of future improvements.

What I ask every client before recommending a refinance timeline

• What is your timeline for the home? Staying 2 years is different than staying 10.
• How important is monthly cash flow right now? If it is tight, waiting is rarely the best plan.
• What is your current estimated value and equity position? Your LTV drives pricing and options.
• Do you have PMI or second financing? Removing PMI can be a win even without huge rate movement.
• Is there a debt strategy involved? Sometimes, cash-out to eliminate high-interest debt improves the full household budget.

If you want background on these refinance structures, these related guides can help:

• Refinance Options in California
• Cash-Out Refinance: When It Makes Sense
• Mortgage Rate Buydowns Explained
• Home Equity Options: Refinance vs HELOC

A practical decision framework for 2026 planning

If you are sitting on a jumbo rate around 7 percent and you can get a meaningful reduction today, I usually recommend at least running two comparisons:

1. Refinance now scenario: Price a low-cost or lender-credit refinance and calculate immediate monthly savings and break-even.
2. Wait scenario: Model your best-case early 2026 plan using the actual 2026 loan limits, your realistic payoff balance, and a conservative rate assumption.

Then we choose based on what you value most: guaranteed savings now, or the possibility of a slightly better outcome later. The goal is to avoid paying an extra year of high interest just to chase a number like “sub-6 or bust.”

If you want me to run these side-by-side for your California property, I will map out the options, show you the break-even math, and help you decide whether it is smarter to move now or position for 2026.

Contact Me anytime and include your estimated home value, current loan balance, credit score range, and what you want most: lower payment, shorter term, or long-term savings.