The Lowdown on Jumbo Mortgages

What is a Jumbo Mortgage?

A jumbo loan, also known as a jumbo mortgage, is a type of home financing for amounts that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA) in the United States. Conforming loan limits represent the maximum loan amount that Fannie Mae and Freddie Mac will purchase or guarantee, and these limits vary by location.

Jumbo loans are used to finance luxury properties and homes in highly competitive local real estate markets. Because they exceed these conforming loan limits, jumbo loans cannot be secured by Fannie Mae or Freddie Mac, making them riskier for lenders. As a result, they often have stricter underwriting criteria, including:

Higher Credit Scores: Lenders typically require a higher credit score for jumbo loan applicants compared to standard conforming loans.
Lower Debt-to-Income Ratios: Applicants for jumbo loans usually need to have lower debt-to-income ratios.
Larger Down Payments: Jumbo loans often require larger down payments (sometimes 20% or more).
Proof of Financial Reserves: Lenders may require proof of significant financial reserves to cover several months of mortgage payments.
Higher Interest Rates: Jumbo loans may carry higher interest rates, although this can vary depending on the lending environment.

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Broker Brothers Mortgage offers a portfolio of jumbo loan options for those borrowers whose needs are as such. Flexibility and options are of paramount importance when handling products such as these, and we take great pride in our ability to provide both.