Jumbo

Jumbo loans are mortgage loans for an amount that surpasses the parameters set by Fannie Mae and Freddie Mac – the government-sponsored giants that purchase most U.S. home loans and set them for investors. If you’re purchasing a mansion, or just a home in a high-priced area, you might need a jumbo loan.

Jumbo loans vs. conforming loans

You will have more purchasing power with a jumbo mortgage loan than a conforming loan. However, you will have to pay more interest since your balance is higher.

Jumbo loan limits

If you need to borrow more money than the loan limit set for your area, you will need a jumbo loan. As of 2022, the limit for conforming mortgage loans in most parts of the country is $647,200. Nevertheless, the mortgage loan limits are much higher in expensive areas.

Jumbo loan rates

The rates on jumbo loans waver and can be higher or lower than the conforming mortgage loan rates. Presently, the average 30-year jumbo loan APR for buying a home is 5.950%, whereas the average 30-year conforming loan APR for buying a home is 6.030%.

Key benefit of a jumbo loan

The key benefit of a jumbo mortgage loan is that it lets you borrow much more than the limits that is not possible by Fannie and Freddie. For example, if you would like to borrow $1 million for a $1.5 million home, a jumbo mortgage loans makes it possible.