What Is A Jumbo Home Loan?
A jumbo loan is a mortgage used to finance properties that are too expensive for a conventional conforming loan. The maximum amount for a conforming loan is $766,550 in most counties, as determined by the Federal Housing Finance Agency (FHFA). Homes that exceed the local conforming loan limit require a jumbo loan.
Also called non-conforming conventional mortgages, jumbo loans are considered riskier for lenders because these loans can't be guaranteed by Fannie and Freddie, meaning the lender is not protected from losses if a borrower defaults. Jumbo loans are typically available with either a fixed interest rate or an adjustable rate, and they come with a variety of terms.
Qualifying For A Jumbo Home Loan
The Process is similar to the underwriting steps for most conventional mortgage products, however they are not backed by federal agencies so the lender assumes more risk. So the credit requirements, proof of income and debt-to-income ratio needed to qualify are usually more strict than what you might need to qualify for a conventional home mortgage.