Jumbo Loans

A jumbo loan is a type of mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. These loan limits are established annually and vary by location, with higher limits in areas where home prices are generally higher.

 

Jumbo loans are typically used to finance higher-priced properties that exceed the conforming loan limits. Because they are larger than conventional conforming loans, jumbo loans often come with different underwriting requirements, such as higher credit scores, lower debt-to-income ratios, and larger down payments. Lenders may also impose stricter income verification and reserve requirements for jumbo loan applicants.

 

Since jumbo loans are not eligible for purchase by Fannie Mae or Freddie Mac, they are considered non-conforming loans and may carry slightly higher interest rates and fees compared to conforming loans. However, they still provide financing options for borrowers seeking to purchase luxury homes or properties in high-cost areas where conforming loan limits are insufficient to cover the purchase price.