A jumbo loan is a mortgage loan that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Conforming loan limits are the maximum loan amount that can be purchased or guaranteed by government-sponsored enterprises such as Fannie Mae and Freddie Mac. In general, jumbo loans are larger and can sometimes be more expensive than conventional loans. Because they are not eligible for purchase by the government-sponsored enterprises Fannie Mae and Freddie Mac, working with an independent mortgage bank will give you more options from which to choose.

Jumbo loans are generally harder to qualify for because they carry a higher level of risk for the lender. This is due to the larger loan size and the fact that the loan is not backed by government-sponsored entities. To mitigate this risk, lenders often require higher credit scores, income levels, and down payments for jumbo loans. Additionally, the interest rates for jumbo loans may sometimes be higher than for conventional loans.

People may consider a jumbo loan if they are looking to purchase a more expensive home and they do not want to pay the higher monthly payments associated with a conventional mortgage with private mortgage insurance. However, it is important to carefully consider the terms and qualifications for a jumbo loan, and to compare offers from multiple lenders to find the best option for your situation.