What is a Jumbo Mortgage Loan?
The jumbo mortgage is designed for an elite set of borrowers that need a much larger loan than the conventional borrower. Mortgage amounts between $424,100 and $3,000,000 are available, which is more than the traditional conforming loan limit. You’ll still get the flexibility of selecting a variety of rates and terms.
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Review the Different Types of Loans
- 30-year Fixed Rate Loan
- FHA Loan
- VA Loan
- 15-year Fixed Rate Loan
- Jumbo Loan
- Adjustable Rate Loan
Questions We Get Asked About Jumbo Loans
A jumbo loan, or a jumbo mortgage, is a category of home loans that exceed the conforming loan limits (maximum that can be financed) set by the Federal Housing Finance Agency. Because of this limit, mortgages that exceed this threshold are not eligible to be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac.
Just because Fannie Mae and Freddie Mac will not accept these larger loans does not mean they are not available. They just tend to have a little higher rate and cost and often require a much higher down payment, anywhere from 15%-35% depending on your credit profile.
The interest rates on jumbo mortgages tend to be significantly higher because of they do not have large guaranteers, like Fannie Mae and Freddie Mac (the US government) and mortgage insurers to back these loans in case of default by the borrower. This increases the risk to the mortgage lender making and servicing the loan. This risk is then hedged with higher mortgage rates and costs.