| A jumbo mortgage loan is one whose total amount is | | | | required to offset such liability. |
| over $417,000 - Loans above this threshold are only | | | | Right alongside the higher interest rate will be a higher |
| slightly different than those below, yet those | | | | down payment requirement - It is almost impossible to |
| differences can be dramatic to borrowers unfamiliar | | | | obtain financing for a jumbo mortgage without a down |
| with such a marketplace. It is also important to note | | | | payment, and this is directly related to the potential |
| that the ceiling for standard mortgage loans as | | | | risks described above. Most jumbo mortgage lenders |
| opposed to Jumbo loans is not set in stone and is | | | | will require a minimum of 5-10%, and the amount will be |
| therefore subject to change at any time. This amount | | | | dependent on the borrower's credit. |
| is decided by the two largest lending organizations in | | | | Stricter documentation required - Since the majority of |
| the Untied States, Freddie Mac and Fannie Mae. | | | | jumbo mortgage loans are with "alternative" lenders |
| One of the most significant differences with a jumbo | | | | such as insurance companies and private investment |
| mortgage loan will be the interest rate - Since lenders | | | | groups, these organizations will commonly have stricter |
| consider homes with sale prices above the threshold | | | | documentation requirements that may include income |
| to be "luxury" residences, they have presented a | | | | and asset verification beyond what the standard |
| potential concern regarding successful resale of such | | | | mortgage lenders request. Also, these alternative |
| homes, as well as an indication that appraisal values in | | | | lenders will usually have loan programs that allow for |
| this category do not increase as steadily as those | | | | longer loan terms than those offered to borrowers |
| homes below the jumbo cap. For this reason, the | | | | below the jumbo threshold. Typically, jumbo mortgages |
| lenders imply that they are taking on more risk with | | | | can have terms stretching as long as 40 or even 50 |
| such places, therefore higher interest rates are | | | | years. |