Jumbo Mortgage

A Jumbo Mortgage is a mortgage loan in an amount above conventional conforming loan limits. As of 2010, the conventional loan limit is $417,000 for the majority of the United States.  This loan limit is set by the two government sponsored organizations Fannie Mae and Freddie Mac, and sets the limit on the maximum value of any individual mortgage they will purchase from a lender. Fannie Mae and Freddie Mac are large agencies that purchase a large sum of U.S. residential mortgages from banks and smaller lenders, allowing them to create liquidity to lend on more mortgages. When Fannie Mae and Freddie Mac limits don't cover the full loan amount, the loan is referred to as a "Jumbo Mortgage". The average interest rates on jumbo mortgages are typically but not always higher than for conforming mortgages.