Jumbo Loans: What Counts as "Jumbo" and How Qualifying Differs
A jumbo loan is a mortgage that exceeds the conforming loan limit set annually by the Federal Housing Finance Agency (FHFA) — the maximum loan amount that Fannie Mae and Freddie Mac will purchase. Loans above that threshold don't qualify as "conforming" and are underwritten differently. What sets the threshold The conforming loan limit is set nationally each year, with higher limits in designated high-cost areas where home prices run well above the national median. Because the limit updates annually and varies by county in high-cost areas, whether a specific loan amount counts as "jumbo" depends on both the year and the property's location — the same loan amount could be conforming in one county and jumbo in another. Why qualifying tends to be stricter Because jumbo loans aren't backed by Fannie Mae or Freddie Mac, the lender holds more of the risk directly (or sells to a smaller secondary market). This typically translates into: Higher credit...