A jumbo mortgage is, as its name implies, a really big mortgage. To be more specific, a jumbo mortgage is one in which the amount being financed is more than the top amount set by the Government Sponsored Enterprises, or GSE. The GSE is a group of financial companies that is charged with maintaining access to housing loans and reducing the cost of those loans so that consumers are able to realize the goal of home ownership.
As part of their duties, the GSE sets a maximum guideline amount for a mortgage, which has traditionally been about $600,000.00. If a mortgage is for more than that amount, it is called a jumbo mortgage.
Of course, we all know that there are lots of houses that cost more than that, so the need for jumbo mortgages has been increasing as the price of housing has increased. Not all lenders offer jumbo mortgages, but there are certainly plenty of lenders who do. Generally speaking, a jumbo mortgage carries more risk for the lender because the payments are very high and even wealthy buyers may at some time in the future have financial difficulties that make it difficult for them to meet their payments. In addition, high-priced homes generally take...
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