Jumbo mortgages are conventional (non-government) mortgages with loan amounts that exceed limits set by Fannie Mae and Freddie Mac. As of 2021, the limit for much of the country is $548,250. In higher-cost markets, loan limits can be up to $822,375 for a single unit home (duplexes, tri-plex's and four-plex's have higher limits) or 150 percent of $548,250.
Because these loans cannot be purchased by the two government-sponsored enterprises (GSEs), jumbo mortgages can be more costly for lenders to originate and their interest rates are often (but not always) higher than those of smaller loans.
Because jumbo (also called non-conforming) mortgages do not have to conform to GSE guidelines, their underwriting standards and loan features vary more than those of conforming mortgages, and their prices do as well.
Because a small difference in interest rate can make a large difference in cost when loan amounts are higher, it is even more important for borrowers seeking a jumbo mortgage to comparison shop and negotiate their best mortgage rate.
- limits announced by FHFA