HomeDictionaryJumbo Loan

Jumbo Loan

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 regulate the maximum loan amount that these entities will purchase or guarantee.

What You Need To Know

In most areas of the U.S., a jumbo loan is generally considered to be any loan amount exceeding the limit for a conforming loan, which is currently $726,200 for a single-family home in all states (except Hawaii and Alaska, and a few federally designated high-cost markets, where the limit is $1,089,300), as of 2023. Jumbo loans are considered higher risk by lenders and may have higher interest rates because they involve larger loan amounts. Lenders may require stricter qualification criteria, including higher credit scores, lower debt-to-income ratios, and larger down payments compared to conforming loans.

Since jumbo loans exceed the limits set by the GSEs, they are considered non-conforming loans. This means they don't meet the standard criteria for conforming loans and are not eligible for purchase or guarantee by Fannie Mae or Freddie Mac. As a result, jumbo loans are typically held by lenders in their own portfolios or sold to private investors.