Jumbo Loan

A Jumbo Loan, also known as a non-conforming loan, is a type of mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages from lenders. These loans are designed for borrowers seeking to finance luxury properties or homes in highly competitive local real estate markets. Because the loan amounts are larger and represent a greater risk for lenders, jumbo loans typically require a stronger credit score, a lower debt-to-income ratio, and a larger down payment compared to conforming loans.

Despite the stricter criteria, jumbo loans allow borrowers the opportunity to finance properties that exceed the limits of standard loans, without having to take out multiple mortgages.