Knowing Jumbo Loans: Essential Information for Potential Loan Applicants
Designed especially to finance properties above the conforming loan limits set by government-sponsored enterprises (GSEs), such as Fannie Mae and Freddie Mac, a jumbo loan is a unique type of mortgage loan. Conventional loans have a maximum limit; jumbo loans let buyers finance more valuable homes since they go above this point. This blog explores what jumbo loans are, their eligibility requirements, advantages, and drawbacks for potential borrowers. Talk of a Jumbo Loan A jumbo loan is a non-conforming loan—that is, one that deviates from the conforming loan criteria set by Fannie Mae and Freddie Mac, the businesses who buy and market secondary market mortgages. Conforming loans typically follow these rules whereas jumbo loans are used for higher-priced homes outside of regional maximum constraints. Annually, the Federal Housing Finance Agency (FHFA) establishes conforming loan limits; typically, these limitations are less in areas with a lower cost of living. In some districts and l...