A jumbo loan is a non-conforming loan. This means that it does not fit the guidelines established by Fannie Mae and Freddie Mac. What makes a jumbo loan non-conforming is the amount of the loan. The Federal Housing Finance Agency sets the max loan limits for a loan that can be purchased by Fannie or Freddie.

Jumbo loans exceed that established limit. If you live in a higher cost area, the conforming limits are set higher due to the elevated costs in those areas. Once a loan exceeds the respective limit, the loan is considered to be a jumbo loan.

Jumbo loans are typically offered by private lenders or banks and come with stricter requirements, such as higher credit score requirements, often needing to be more than 700, larger down payments, usually 10 to 20% or more, lower debt to income ratios are expected, full documentation of income, assets, and employment, and they may even have higher interest rates.

So this will vary by market conditions. Jumbo loans offer flexibility for borrowers buying real estate in high-cost areas or seeking luxury properties. If you're interested in learning more about Jumbo loans and or you want to see if you qualify, please schedule a call with me today.