A Jumbo Mortgage is a mortgage with a loan amount above conventional loan limits. This standard is set by the two largest secondary market lenders, Fannie Mae and Freddie Mac. The loan amounts reflect average loan sizes nationwide. Jumbo mortgages apply when Fannie Mae (FNMA) and Freddie Mac (FHLMC) limits don’t cover the full loan amount.
In comparison to similar mortgage loans of smaller amounts, a jumbo mortgage carries a higher interest rate because lenders identify it as a loan at high risk. A large percentage of mortgage loans given by lenders are conforming loans, whereas jumbo loans make up only a small fraction of all mortgaging.Most home loan mortgages given in the United States are of loan amounts smaller than limitations set by the famous trendsetters Fannie Mae and Freddie Mac. In California, however, real estate pricing is so high that many jumbo home loan deals are done there, to take advantage of those higher limits attainable.
