Jumbo Mortgage Loans – Things You Should Know

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The definition of a Jumbo Mortgage is a mortgage loan whose total amount is higher than the standard conventional limits. Jumbo loans are simply mortgages for higher-than-normal loan amounts. The gold standard of normal in the lending industry is what is called a conforming, conventional loan; that is, a loan that conforms to the secondary market agencies conventional underwriting requirements regarding credit, income/asset verification, property features, etc.

As of February 20th, 2007, the maximum amount for this conforming loan is $417,000 for a single unit property, $533,850 for a 2-unit property, $645,300 for a 3-unit property and $801,950 for a 4-unit property. The conventional limit for second loans is $208,500 and all loan limits are 50% higher for properties in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. These limits change periodically with the real estate market.

Most lenders are willing to lend over and above these conforming amounts, but the larger jumbo loan amount translates into a larger risk for the lender should you default on the loan. Simply stated, the more the bank lends, the more it stands to lose if something goes wrong and they need...

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