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Home prices are approaching, and in some markets exceeding, the peaks hit during the run-up to the Great Recession. And that means ever more of the mortgages that buyers need are jumbo mortgages — typically for $417,000 or more. As jumbo loans become a bigger piece of banks’ lending business, some borrowers lower on the income ladder could lose out.

In the post-recession market, jumbo mortgages are more desirable for banks to have on their balance sheets than lower-value loans, said real estate professor Chris Mayer at Columbia Business School. “These are super safe loans to borrowers who have significant down payments and are highly qualified.”  The story...