JUMBO MORTGAGE

What Is A Jumbo Mortgage

 

A Jumbo mortgage loan is a loan that is considered non-conforming. A conforming loan is a loan that fits into Fannie Mae guidelines. The current maximum conforming loan amount is $367,500 on single family residence mortgage loans. A jumbo loan is based on the mortgage amount not on the value of the home. For example a $300,000 loan on a property worth $600,000 is still considered a conforming loan and does not fit into a Jumbo Loan status.

Generally the rate on a Jumbo loan is slightly higher than the rate on a conforming loan as it is not subsidized by Fannie Mae which is a quasi-governmental agency. Jumbo loans also have a more strict debt ratio policy as the lender realizes more risk than a conforming mortgage loan.

 

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