Jumbo Loan

A jumbo loan is a mortgage loan that exceeds the conforming loan limit set by the Federal Housing Finance Agency (FHFA). The conforming loan limit is the maximum amount that Fannie Mae and Freddie Mac will purchase from lenders. Jumbo loans are typically made by private lenders and are available in amounts up to $453,100 in most areas of the country. In high-cost areas, the conforming loan limit is higher and jumbo loans can be up to $970,800.

Jumbo loans are often used to purchase more expensive homes, such as second homes or investment properties. They can also be used to refinance existing mortgages that exceed the conforming loan limit.

The interest rates on jumbo loans are typically higher than those on conforming loans, because they are considered to be riskier. This is because jumbo loans are not backed by the government, so lenders have more risk if the borrower defaults on the loan.

Jumbo loans also have more stringent requirements than conforming loans. Borrowers typically need to have a higher credit score, a larger down payment, and more income to qualify for a jumbo loan.

Before you apply for a jumbo loan, it's important to compare interest rates from multiple lenders. You should also make sure that you understand the terms of the loan and that you can afford the monthly payments.

If you have questions about jumbo loans, you can talk to a mortgage lender or financial advisor.