Any time a loan amount exceeds the conventional loan limit set by Fannie Mae / Freddie Mac for a county, it is considered a jumbo loan. Jumbo loans can usually be obtained through the same loan officers/mortgage lenders that other types of loans can be obtained – but not always.
When shopping interest rates and guidelines for jumbo loans, it is important to remember that as the credit crisis is in full swing, sometimes jumbo loans can be more difficult to get than other types of home financing.
Jumbo Loans: Bigger Properties Require Bigger Loans
Jumbo loans are typically used when someone wants to purchase or refinance a luxury home that requires a loan amount above the conventional loan limits for the county the property is in. Jumbo loans typically will have slightly higher interest rates and down payment requirements – but not always.
Jumbo Loans vs. Super Jumbo Loans
Jumbo loans are generally grouped into two different categories: jumbo loans and super jumbo loans and combined they consist of about 10% of the total mortgage market. A jumbo loan is typically any loan amount that is less than $1 million and a super jumbo loan is considered anything with a loan amount greater than $1 million.
Jumbo Loan Limits
Because the conventional loan limits change each year, the jumbo loan limits also change accordingly. Each year, Fannie Mae (FNMA) and Freddie Mac (FHLMC), sets the loan limits by county for the “conventional loan limit” that they will loan money at. Any loan over this conventional loan limit is considered a jumbo loan and as the size of home in the US grows, so does the popularity of jumbo loans.