Jumbo Mortgage

Definition of a Jumbo Loan

Jumbo mortgages are defined by a loan amount that exceeds the maximum amount that Fannie Mae and Freddie Mac will loan, otherwise called the conforming loan limit. Currently, the conforming loan limit is set at $417,000, so if you are looking to obtain a mortgage above that amount, you must either pay for anything over $417,000 in cash or obtain a jumbo mortgage.

Benefits of a Jumbo Loan

Jumbo mortgages have one main benefit and that is the ability to obtain conventional financing above the conforming loan limit of $417,000. You can also get a jumbo VA loan, but it will require a small percentage down. Check with a VA-approved lender if you are interested in this. 

Other Jumbo Mortgage Considerations

Tighter Qualification Standards

Jumbo mortgages have more stringent qualification standards than most other mortgages because the lender is taking on more risk by loaning a higher balance. Additionally, because payments are higher, more income and lower debt-to-income ratios are also generally required.

Higher Pricing

Jumbo mortgages typically have between a 0.25% to 0.75% higher interest rate than other mortgages as well. This is further risk protection placed by the lender.

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