A Jumbo or Super Jumbo Loan is one that surpasses a certain amount, which will depend on your county. These loans will offer high-end financing that traditional loans cannot. Jumbo loans were created to provide affordable financing for certain areas that had experienced substantial home value appreciation. A Jumbo loan is sometimes called a nonconforming mortgage, this is because you do not have to follow the guidelines of Fannie Mae and Freddie Mac, which are government-sponsored entities that create standards for down payment, credit score, post-closing reserves, and loan amount. Once the standards are met, conforming loans can be purchased from the lending bank by Fannie Mae and Freddie Mac guaranteeing the loan.
Whereas for Jumbo loans, lending institutions may keep the loans on their books or sell them to other investment entities. Jumbo mortgages are available for primary residences, second homes, and investment properties, and are also available for fixed and adjustable rates.
Generally, a Jumbo Loan can be used if the mortgage loan amount you are looking for is above $453,100. That is the case in 93% of counties in the U.S., but if your home is in a high-cost area the limit is usually over $679,650.
Credit score requirements are usually around the same as those needed for conforming loans, but sometimes they require a higher down payment, higher interest rate, and stricter underwriting guidelines.
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