What Is a Jumbo Mortgage? Unpacking Bigger Home Loans for Buyers

Few things feel more serious than taking out a loan, especially when that loan is a mortgage to buy a house. You’re signing on to care for and maintain real estate property, while also agreeing to pay back your loan in accordance with the contract you signed in order to receive the funds. So when a term like “jumbo mortgage” comes up, it may sound like some kind of joke or exaggeration, or — if you’ll excuse the pun — mumbo jumbo. But in fact, it’s a very real thing!

To clear up any confusion, we’re digging into exactly what a jumbo mortgage is, how it works, and who it’s for. For expert, first-hand insight, we’ve brought in top Washington, D.C. area real estate agent Jason Cheperdak, who also holds a jumbo mortgage himself.

First things first: What is a jumbo mortgage?

Jumbo mortgages are home loans for an amount that surpasses the conforming loan limits set by the Federal Housing Finance Agency (FHFA).

In this case, “conforming” means that a loan meets the requirements for purchase by a government-sponsored enterprise (GSE) — think Fannie Mae and Freddie Mac. When a loan doesn’t meet these requirements, it’s considered non-conforming, and this includes jumbo loans.

Though jumbo loans can have favorably low interest rates (more on that later), they are a higher risk for the lender, and thus carry more stringent requirements for borrowers.