A jumbo mortgage is a type of home loan that exceeds the conforming loan limit set by the Federal Housing Finance Agency (FHFA). The conforming loan limit is the maximum loan amount that can be purchased by Fannie Mae and Freddie Mac, the two government-sponsored entities that purchase the majority of U.S. residential mortgages from lenders. If a loan exceeds the conforming loan limit, it is considered a jumbo loan.
Jumbo loans typically have higher loan amounts and interest rates compared to conforming loans, and may also have more stringent eligibility requirements, such as a higher credit score and a larger down payment. Jumbo loans are designed for borrowers who need to finance high-end or luxury homes, and are typically used by borrowers who have high income and substantial assets. The terms and conditions of a jumbo mortgage can vary greatly depending on the lender, the market conditions, and the borrower’s financial profile.
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