Financing for High-Value Homes

A jumbo loan is a type of mortgage specifically designed to finance properties that exceed the limits of a conventional conforming loan. As determined by the Federal Housing Finance Agency (FHFA), the current maximum for a conforming loan is $766,550 in most U.S. counties. Homes that surpass this amount require a jumbo loan, often used for luxury properties or high-priced real estate markets.

Since jumbo loans don’t conform to the guidelines set by Fannie Mae and Freddie Mac, they are considered riskier for lenders. This means that these loans cannot be guaranteed by government-backed entities, which offer protections to lenders in case of borrower default. As a result, jumbo loans come with stricter qualification requirements, such as higher credit scores, larger down payments, and proof of substantial income or assets.

Despite the added challenges, jumbo loans offer homebuyers flexibility, as they are available with both fixed and adjustable interest rates, and various term lengths to suit individual financial goals.