Jumbo Loans
Financing for loan amounts above the applicable conforming loan limit for the property location.
What is a jumbo loan?
A jumbo loan is a mortgage used to finance a loan amount above the applicable conforming loan limit. It can help borrowers finance higher-priced properties when the required mortgage is too large for a conventional conforming program.
How conforming limits work
The Federal Housing Finance Agency establishes conforming loan limits. Limits depend on the calendar year, county and number of property units, and higher-cost areas can have higher limits. The $766,550 figure shown in the supplied reference is an older baseline limit, not a current nationwide limit. Use the applicable limit for the property and loan year.
What does it offer?
Jumbo loans are also called non-conforming conventional mortgages. Because their amounts exceed the conforming limits, they are not eligible for standard Fannie Mae or Freddie Mac conforming purchase. Lenders set their own program requirements and evaluate the additional lending risk.
Programs may offer a fixed interest rate or an adjustable interest rate, with a variety of repayment terms. Available loan amounts, credit requirements, down payment, income documentation and reserves vary by lender.
Why would a borrower apply?
A borrower may want to purchase or refinance an eligible higher-value home while using one larger mortgage rather than limiting financing to the conforming amount. Primary residence, second-home and investment-property eligibility depend on the selected program.
