Question 1

What makes a loan "jumbo" instead of conforming?

Accepted Answer

A loan is jumbo simply because its amount exceeds the conforming loan limit the FHFA sets each year for Fannie Mae and Freddie Mac to purchase. That limit is higher in officially designated high-cost counties, so the same loan amount can be conforming in one county and jumbo in another — check your county’s specific limit.

Question 2

Do jumbo loans always have higher interest rates?

Accepted Answer

Not always — the spread between jumbo and conforming rates has varied over time and sometimes jumbo rates run lower, since jumbo borrowers are often seen as lower credit risk on average. It varies by lender and market conditions, so shop rates directly rather than assuming a fixed premium.

Question 3

What qualification requirements are typically stricter for jumbo loans?

Accepted Answer

Lenders commonly ask for a larger down payment (often 10-20%+), a higher credit score, a lower debt-to-income ratio, and larger cash reserves than for a conforming loan, since jumbo loans can’t be sold to Fannie Mae or Freddie Mac and the lender carries more of the risk directly.

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Standard amortization, compared to the conforming limit

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