What is jumbo loan amount?

A jumbo loan is a type of mortgage loan that exceeds the limits set by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. These limits are established to secure the availability of affordable mortgages for homebuyers.

The exact amount considered as a jumbo loan amount varies depending on the location and the year. In most areas of the United States, a jumbo loan is any mortgage exceeding $548,250 as of 2021. However, in high-cost areas where the cost of living is higher, the threshold can be higher, reaching up to $822,375 or more.

It's important to note that jumbo loans often have stricter qualification criteria compared to conforming loans, which are the mortgages that meet the limits set by the GSEs. Borrowers will need to demonstrate higher credit scores, lower debt-to-income ratios, and have a larger down payment to be eligible for a jumbo loan.

Interest rates on jumbo loans may also be slightly higher compared to conforming loans due to the increased risk to lenders. However, rates can vary based on market conditions as well as individual factors such as creditworthiness and loan terms.

Jumbo loans are commonly used for financing luxury or high-priced homes, as well as properties in high-cost areas with expensive real estate markets. It is always advisable to consult with a lender or mortgage professional to determine the specific loan limits and requirements for jumbo loans in a particular area.