Jumbo Loan
A jumbo loan, also known as a non-conforming loan, is a mortgage loan that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Jumbo loans are designed to finance luxury properties and homes in high-cost areas that exceed the conforming loan limit. These loans typically require a higher credit score and a larger down payment than conforming loans, but offer more flexible underwriting guidelines.
History of Jumbo Loans
Jumbo loans have been around since the 1980s, but they have become increasingly popular in recent years. The FHFA sets the conforming loan limit each year, and it is based on the median home price in the area. In 2021, the conforming loan limit is $548,250 in most areas, and $822,375 in high-cost areas. Any loan amount that exceeds the conforming loan limit is considered a jumbo loan.
Jumbo loans are typically used to finance luxury homes and properties in high-cost areas. They are also used to purchase multiple properties, such as investment properties or vacation homes. Jumbo loans are also used to refinance existing mortgages, and they can be used to purchase second homes.
Comparison Table
| Loan Type | Loan Limit | Down Payment | Credit Score |
|---|---|---|---|
| Conforming | $548,250 | 3-20% | 620+ |
| Jumbo | $822,375+ | 20-30% | 680+ |
Summary
Jumbo loans are designed to finance luxury properties and homes in high-cost areas that exceed the conforming loan limit. These loans typically require a higher credit score and a larger down payment than conforming loans, but offer more flexible underwriting guidelines. For more information about jumbo loans, you can visit the websites of the Federal Housing Finance Agency, the Consumer Financial Protection Bureau, and the Department of Housing and Urban Development.
See Also
- Conforming Loan
- Mortgage Loan
- FHA Loan
- VA Loan
- Fixed-Rate Mortgage
- Adjustable-Rate Mortgage
- Interest-Only Mortgage
- Balloon Mortgage
- Reverse Mortgage
- Bridge Loan
