Jumbo Loan
A jumbo loan, also known as a non-conforming loan, is a type of mortgage loan that exceeds the maximum loan limits set by government-sponsored agencies such as Fannie Mae and Freddie Mac. These loan limits vary by location and are typically higher in areas with higher housing costs.
Jumbo loans are commonly used to finance luxury properties or homes in high-cost areas where the property values exceed the conforming loan limits.
Here are some key characteristics of conventional loans:
Credit Requirements
680 or higher.
Down Payment
Jumbo loans often require larger down payments compared to conventional loans, the down payment requirement can vary but is typically around 20% of the purchase price
Terms and Interest Rates
Jumbo loans generally have longer loan terms, such as 30-year fixed-rate or 15-year fixed-rate options.
Highlights:
Jumbo loans are commonly used for luxury properties or homes located in high-cost areas.
Income and asset verification requirements are more stringent to ensure the borrower's ability to repay the larger loan amount.
Jumbo loans may require additional reserves as a safety net against future financial challenges.
Private mortgage insurance (PMI) is typically not required for jumbo loans.