Definition of a Jumbo Mortgage

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 $453,100, so if you are looking to obtain a mortgage above that amount, you must either pay for anything over $453,100 in cash or obtain a jumbo mortgage.

Benefits of a Jumbo Mortgage

Jumbo mortgages have one main benefit and that is the ability to obtain conventional financing above the conforming loan limit of $453,100.

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 higher interest rates than other mortgages as well. This is further risk protection placed by the lender.