finance
jumbo loan
A jumbo loan is a mortgage that exceeds the conforming loan limit set for loans that Fannie Mae and Freddie Mac can buy. Because it cannot be sold to those agencies, it is a nonconforming loan, and lenders often hold it or sell it to private investors. Jumbo loans typically have stricter credit, down payment, and reserve requirements. Loan limits are set annually and are higher in high-cost areas.
- Exam tip
- Jumbo loans are nonconforming because of size. A loan can also be nonconforming for other reasons, such as credit, so not every nonconforming loan is jumbo.
- Example
- A buyer needs a $1.2 million mortgage in an area where the conforming limit is lower, so she takes a jumbo loan.
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Last verified: 2026-10-23