A JUMBO LOAN IS ?
A mortgage that is larger than the limits set by Fannie Mae & Freddie Mac.
In the United States, a jumbo mortgage is a mortgage loan that may have high credit quality.
When FNMA and FHLMC limits don’t cover the full loan amount, the loan is referred to as a “jumbo mortgage”.
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, though it changes infrequently.
A jumbo loan, also known as a jumbo mortgage, is a type of financing that exceeds the limit 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. It is designed to finance luxury properties and homes in highly competitive local real estate markets. Jumbo mortgages come with unique underwriting requirements and tax implications. These kinds of mortgages have gained traction as the housing market continues to recover following the “Great Recession”.
The limit was increased from $453,100 in the year 2018 to $484,350 as in 2019 for most of the country. While for counties that have higher home values, the baseline limit is set at $726,525, or 150% of $484,350.
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 stellar credit score and a very low debt-to-income ratio.
- The average APR for a jumbo mortgage is often par with conventional mortgages, while down payments are roughly 10% to 15% of the total purchase price.
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