What is a Jumbo Loan?
A conventional loan is considered Jumbo if it exceeds what is known as the conforming loan limit, set by the Officer of Federal Housing Enterprise Oversight (OFHEO) on an annual basis. If the conventional loan exceeds this conforming limit, the loan is not eligible for purchase by Freddie Mac or Fannie Mae and must be sold on the secondary market. Conforming loan limit will vary by county.
Basic Jumbo Loan Provisions
Offers the same flexibility of conforming loans
Conventional lenders typically ask for 20% down on Jumbo Loans
Interest rates on Jumbo loans run higher than conventional counterparts
Is a Jumbo Loan Right for You?
Jumbo loans are a great option for any borrower who can afford the monthly payment of a higher loan but does not have the down payment to bring the loan down to conforming limits. Also, for borrowers wanting to improve their credit score quickly, making payments on time on a Jumbo loan will rapidly build your credit.