A Jumbo Loan is a type of mortgage that exceeds the financing limits set by the Federal Housing Finance Agency (FHFA). These mortgages are designed to finance luxury homes and estates in highly competitive real estate areas.
Jumbo Mortgages for your Jumbo Homes!
If a loan amount exceeds the limit set by Fannie Mae and Freddie Mac, loan agencies created by Congress to provide stability, liquidity, and affordability to the mortgage market, it is called a Jumbo Loan.
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. – Investopedia
Typically, lenders require a 20% or more down payment on a jumbo loan, also called non-conforming loans, and interest rates often run between 3/8% and 1/2% higher than regular mortgage loan rates. However, a jumbo loan can be a great way to combine a 1st and 2nd mortgage. Additionally, with home prices increasingly on the rise in may parts of the U.S., many buyers need jumbo loans to finance new home purchases.
Maximum jumbo loan amounts vary by lender. Borrowers have the option of fixed-rate or adjustable-rate jumbo loans. This type of mortgage loan can be used for primary residences, investment properties, or vacation homes.