A jumbo loan is a mortgage for an amount above the conforming loan limit, the ceiling on what Fannie Mae and Freddie Mac will buy.
The Federal Housing Finance Agency sets that limit. It goes up most years, and it’s higher in expensive counties than in the rest of the country. So whether your loan counts as jumbo depends on the year you borrow and the county you buy in. The price of the house alone doesn’t decide it.
Why the terms are different
No government-sponsored company buys jumbo loans, so the lender keeps the risk. That usually means a larger down payment, a stronger credit profile, more cash left in reserve after closing, and a closer look at your income than a conforming loan would get.
Jumbo loans come fixed-rate or adjustable-rate, with the usual range of terms. Pricing varies more from lender to lender than it does on conforming loans. That’s exactly when it pays to shop several of them.
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