is a loan that is over the conforming loan limit ($417,000) set by the government-sponsored
agencies, Freddie Mac (FHLMC) and Fannie Mae (
). When FNMA and FHLMC limits don’t cover the full loan amount, the loan is referred to as a “jumbo loan”.
s are traditionally higher on jumbo loans than for conforming loans and a larger
might be required. In addition, the loan usually requires higher
s and higher reserves (or emergency funds) than conforming loans. Fixed and adjustable loans are available in jumbo form.
In some instances, a combination loan can be obtained to reduce the need for a Jumbo loan. The option includes a first loan at the conforming loan amount of $417,000 and a second loan for the difference. Higher interest rates on the second loan can sometimes offset the savings on the first loan. The option must be compared against the Jumbo loan to determine if the savings warrant the additional complexity of having two loans.