What Does Jumbo Loan Mean?
A mortgage with a loan amount exceeding the conforming loan limits set by the Office of Federal Housing Enterprise Oversight (OFHEO), and therefore, not eligible to be purchased, guaranteed or securitized by Fannie Mae or Freddie Mac. OFHEO sets the conforming loan limit size on an annual basis.
Also referred to as "Jumbo Mortgage".
Investopedia explains Jumbo Loan
Jumbo loans are often securitized by institutions other than Fannie Mae or Freddie Mac. These securities carry more credit risk than those issued by Fannie Mae or Freddie Mac, and therefore, trade at a yield premium which translates into slightly higher interest rates. However, in recent years the spread in interest rates between jumbo and conventional mortgages has been reduced.
Jumbo Loans exceed the maximum loan amounts established by Fannie Mae In Texas,
Conventional limits stop at $417,000 and Jumbo begins. Rates on jumbo loans are slightly higher than conforming loans. Jumbo Loans are typically used to buy more expensive homes and high-end custom construction homes.
What Does Jumbo Loan Mean?
