Table of Contents
- What is a Jumbo Mortgage?
- What is a 30 Year Jumbo Mortgage?
- Difference Between Conforming and Jumbo
- Who Should Consider a Jumbo Loan?
What is a Jumbo Mortgage?
A jumbo mortgage is a type of home loan that exceeds the conforming loan limit set by the Federal Housing Finance Agency (FHFA). This limit is set at $484,350 for most of the U.S., except for certain high-cost areas. In these areas, the limit is higher, up to $726,525.
Jumbo mortgages are used to purchase homes that are too expensive for a conforming loan. They are also used by borrowers who want to refinance their existing mortgage and need a loan amount that exceeds the conforming loan limit.
Jumbo mortgages are typically more expensive than conforming loans, as they carry a higher risk for lenders. This is because jumbo mortgages are not backed by the government, so lenders must assume all of the risk if the borrower defaults.
What is a 30 Year Jumbo Mortgage?
A 30 year jumbo mortgage is a home loan that exceeds the conforming loan limit set by the FHFA. It is a long-term loan that typically comes with a fixed rate and a 30 year term. The loan amount is typically higher than the conforming loan limit, so it carries a higher risk for lenders and typically comes with a higher interest rate.
The 30 year jumbo mortgage is one of the most popular mortgage products, as it allows borrowers to purchase a more expensive home than they would be able to with a conforming loan. It also allows borrowers to lock in a low interest rate for a longer period of time.
Difference Between Conforming and Jumbo
The main difference between conforming and jumbo mortgages is the loan amount. Conforming loans are limited to the conforming loan limit set by the FHFA, while jumbo mortgages exceed this limit. Jumbo mortgages also typically come with higher interest rates and stricter underwriting requirements, as they are not backed by the government.
Another difference between conforming and jumbo mortgages is the availability of certain loan products. Jumbo mortgages are not available in all areas, as they are only offered in certain high-cost areas. Additionally, certain loan products, such as adjustable rate mortgages, may not be available for jumbo loans.
Who Should Consider a Jumbo Loan?
Jumbo loans are best suited for borrowers who are looking to purchase a more expensive home than they would be able to with a conforming loan. They are also ideal for borrowers who want to lock in a low interest rate for a longer period of time.
Jumbo loans may also be a good option for borrowers who have a higher credit score and a larger down payment. This is because jumbo loans typically come with higher interest rates and stricter underwriting requirements.