Maximum loan limits are set by two government-sponsored enterprises known as Fannie Mae and Freddie Mac. Together they set the limits on the maximum loan value of any individual mortgage they will purchase from a lender.
When the limits set by Fannie Mae and Freddie Mac do not cover the full loan amount the loan is considered a jumbo mortgage.
Keep in mind that as a borrower, jumbo loans are based on loan amount and not purchase price. Loan amounts must be greater than $424,100 to use a jumbo loan. For example, if a home is bought for a purchase price of $450,000 and $30,000 is put down the loan amount would be $420,000. This would be considered a conventional loan.
Here are a few frequently asked questions:
No, the qualifying criteria is considered just like any other loan. Lenders will look at your credit score, size of the down payment, monthly debt obligation and debt to income ratio.
Just like any other loan the higher your credit score the better rate and options may be available to you. Required scores will vary from lender to lender but scores as low as 680 may qualify you but higher scores of 720 and up will get you better rates.
This comparison varies over time. Depending on the current housing market jumbo rates may be .25 percent higher or even very comparable to conventional rates.
Speaking to a mortgage professional can help answer this and more if you are considering a jumbo loan.