What is a Jumbo Loan?

The Federal Housing Finance Agency (FHFA) sets a baseline loan limit across the country. Loan amounts that fall within this limit are considered “Conforming” and are eligible to be for purchase by Fannie Mae and Freddie Mac.

Loan amounts that exceed this loan limit are called Jumbo loans. These loans are not purchased by Fannie Mae or Freddie Mac. They are typically “portfolio” loans for large banks and hence have stricter qualifying guidelines and higher rates.

The conforming loan limit will increase to $647,200 in 2022 (with an increase to $970,800 for high-balance loans).

Jumbos include:

  • Fixed-rate or adjustable-rate options
  • No PMI
  • Higher rates
  • Strict guidelines

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