What is a Jumbo Loan?

In some parts of the country, property values have greatly increased. This has caused the need for homebuyers to apply for jumbo loans in order to finance their mortgage. Jumbo mortgages, or jumbo loans, are those that exceed the dollar amount loan-servicing limits put in place by GSE’s Freddie Mac and Fannie Mae. This makes them non-conforming loans.

Recently the Federal Housing Finance Agency announced that the 2019 conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac will increase nationwide from $453,100 to $484,350. Additionally, due to the underlying formula, the maximum limit in high-cost areas will increase to $726,525

Jumbo Loan Approval

Qualifying for a jumbo loan can be a little more difficult than qualifying for a conforming loan. This is because the loan isn’t backed by Fannie or Freddie so the lender has to mitigate financial risk in other ways. The qualifications tend to be more stringent. Borrowers often must meet a higher credit score, income, and have reserves in order to qualify.

A loan doesn’t have to be seven digits in order to be considered a jumbo loan. Even just a dollar over the conforming loan amount can be considered a jumbo loan.

To learn more about jumbo loans or about the increasing conforming loan limits, reach out to First Ohio Home Finance!