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Jumbo Home Loans
As the name implies, a jumbo loan covers a larger-than-normal loan amount. More specifically, a jumbo loan is any mortgage that exceeds an area’s conforming loan limits, which are set yearly by the Federal Housing and Finance Agency (FHFA). Jumbo loans can be used for primary homes, investment properties and vacation homes.
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Many mortgage lenders offer jumbo loans up to $3 million or $5 million. You might be able to find jumbo loans in even higher amounts, especially if you work with a mortgage broker who specializes in them.
How do jumbo loans work?
Jumbo loans aren’t much different from traditional mortgages. The payment schedules and other details are generally the same. Borrowers can get fixed- or adjustable-rate jumbo mortgages with various term options.
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The interest rates on jumbo loans often differ from conforming loan rates, too. Historically, jumbo interest rates have been higher than their conforming loan counterparts. However, as of October 25, 2023, the 30-year jumbo rate was 7.72 percent according to Bankrate’s survey of national lenders, with the conforming 30-year fixed at 8.01 percent. Part of the reason for this is an increase in guaranteed fees charged on conforming loans to lenders by Fannie Mae and Freddie Mac.
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The maximum size of a jumbo loan varies by your mortgage lender and location, as does the exact qualifying guidelines. It’s usually beneficial to work directly with a mortgage lender like Three Peaks Mortgage, we specializes in them!