Jumbo Loan
What Is a Jumbo Loan?
A jumbo loan is a mortgage that exceeds conforming loan limits set by Fannie Mae and Freddie Mac.
Because it surpasses these limits, it cannot be sold into the standard secondary mortgage market.
Jumbo loans are used to finance higher-priced properties.
Why It Matters in a Mortgage
Jumbo loans often require:
- Higher credit scores
- Larger down payments
- Lower debt-to-income ratios
- Significant cash reserves
They carry greater lender risk because they lack government backing.
Interest rates may be slightly higher or competitive, depending on market conditions.
How It Works
Loan amount exceeds conforming limit.
Lender retains loan or sells to private investors.
Underwriting standards are typically stricter.
Jumbo vs. Conforming
Jumbo → Exceeds agency limits
Conforming → Within limits
FAQs About Jumbo Loans
Do jumbo loans require 20% down?
Often, but varies by lender.
Are jumbo rates higher?
Sometimes, depending on risk.
Are jumbo loans government-backed?
No.
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