A jumbo loan is a mortgage that exceeds the conforming loan limit set by the federal government. These loans—meant to finance expensive properties—cannot be purchased or securitized by the government-backed entities Fannie Mae or Freddie Mac, which increases a lender’s risk because it will have to hold onto the loan for longer. You’ll pay more for a jumbo mortgage than a conventional home loan, and you’ll have to meet tougher qualification guidelines.
The conforming loan limit is adjusted annually. In 2020, the conforming limit is $510,400 in most parts of the U.S., but can be as much as $765,600 in higher-cost regions.
Who Needs a Jumbo Loan?
Buyers who don’t meet the Fannie and Freddie loan limit restrictions are either expected to increase the amount of their down payment or find a lender that will offer a second mortgage for the difference so that they can get conforming loans, says Andrina Valdes, COO of Cornerstone Home Lending in San Antonio, Texas. Otherwise, the borrower will need to seek a jumbo mortgage loan click this link now.
A jumbo mortgage is a loan designed for a borrower who needs to finance a loan balance greater than conforming loan lending limits. The operative word here is “borrow” or “finance”—it’s not the purchase price. You might also hear a jumbo loan referred to as a non-conforming loan. Read More