Jumbo Loans

A jumbo loan, also known as a jumbo mortgage, is a type of financing that exceeds the limits set by the Federal Housing Finance Agency (FHFA). Unlike conventional mortgages, a jumbo loan is not eligible to be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac. Designed to finance luxury properties and homes in highly competitive local real estate markets, jumbo mortgages come with unique underwriting requirements. Jumbo loan rates vary widely and frequently, and in recent years have sometimes been lower than those for conforming loans. The value of a jumbo mortgage varies by state—and even county. The FHFA sets the conforming loan limit size for different areas on an annual basis. 

KEY TAKEAWAYS

• A jumbo loan is a type of financing that exceeds the limits set by the Federal Housing Finance Agency and cannot be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac.

• Homeowners must undergo more rigorous credit requirements than those applying for a conventional loan.

• Approval requires a good credit score and a low debt-to-income ratio. 

• The average APR for a jumbo mortgage is often par with conventional mortgages.