A jumbo mortgage loan or jumbo loan is a mortgage with a loan amount above the industry-standard definition of conventional conforming loan limits.

Most Reputable Mortgage Brokers have relationships with other large investors, such as insurance companies and banks, which step in to fill the need, with maximum mortgage amounts going to the $1 million or $2 million range. These larger loans are known as super jumbo loans.

Jumbo mortgage loans are above the conformming limits and may be offered by seller servicers of these wholesale institutions, as well as Wall Street conduits who provide warehouse financing for mortgage lenders.

Jumbo Mortgage loan amounts reflect average loan sizes nationwide. Jumbo mortgages apply when agency Fannie Mae and Freddie Mac limits don't cover the full loan amount.

Many companies offer automated underwriting for Jumbo Loans just like conforming loan amounts. Many times there is little difference between jumbo loan financing rates and conforming loan rates with a high quality loan. Lower quality jumbo loans, however, are difficult to finance.

As of 2006, the conforming loan limit is $417,000, or $625,500 in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Any mortgage amount great than this is considered a Jumbo Loan or Jumbo Mortgage.

Jumbo loans will usually have a slightly higher interest rate than "normal" conforming (non-Jumbo) mortgage loans. One reason being is because they can be considered a higher risk loan for a lender because of the much larger value the lender is lending to a borrower for a mortgage that is classified as a Jumbo Loan. Therefore, if you are comparing rates between mortgage companies make sure that you are receiving quotes for "Jumbo" rates and not just standard conforming rates.

Many Jumbo loans are portfolio mortgage loans that are not sold by the lender. Because of such, the interest rates on jumbo mortgages are typically greater than is normal for conforming mortgages, and vary depending on property types and mortgage amount.

Home loans that are over 1 million can be classified as a Jumbo or super Jumbo loan and have interest rates that are higher than conforming loans. These mega-million dollar loans will be effected by the loan to value ratio and the amount of cash taken out for a refinance.

 

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