What is a Jumbo Loan?
There are two types of loans: Conforming loans and non-conforming loans, also called Jumbo Loans. A conforming loan limit – the maximum amount that can be borrowed – is determined by Fannie Mae and Freddie Mac. These are two government-sponsored enterprises that buy mortgages from lenders. Currently the limit is $417,000 in most parts of the United States, with a few exceptions. All other home loans that exceed this limit are considered Jumbo Loans. Jumbo Loans typically have higher interest rates and/or costs and they often have different qualification rules.
Remember that where you buy or refinance will determine the conforming loan limit. Out of the 3,300 counties in the United States, about 100 counties have a higher-cost conforming limit of $625,500. Another 92 counties have loan limits that are between $417,000 and less than $625,500.