Jumbo financing, also known as a jumbo loan, is a type of mortgage loan that is used to finance properties with a higher value than what is considered to be the conforming loan limit set by government-sponsored entities such as Fannie Mae and Freddie Mac. The conforming loan limit is updated annually and varies depending on the location of the property.
Jumbo financing is usually required for properties that are more expensive, such as luxury homes or high-end real estate. Because jumbo loans exceed the conforming loan limit, they typically have different underwriting requirements and interest rates than conventional mortgage loans.
Jumbo financing may come with stricter underwriting requirements, such as higher credit score requirements, larger down payment requirements, and more stringent income and debt-to-income ratio requirements. Additionally, jumbo loans may have higher interest rates and closing costs, as compared to conventional mortgage loans.
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