The Jumbo Loan Program
A Jumbo loan, often called a non-conforming loan is a mortgage with a loan amount that exceeds Conventional Conforming loan limits. The loan limit is set by Fannie Mae and Freddie Mac. The limit in NC is $484,350. Jumbo loans typically hold a higher interest rate because they are not backed by Fannie Mae or Freddie Mac.
A Jumbo, or non-conforming loan, is required for financing on a mortgage that exceeds the conforming loan limits set forth by Fannie Mae and Freddie Mac.
According to Wikipedia:
In the United States, a Jumbo mortgage is a mortgage with a loan amount above Conventional conforming loan limits. This standard is set by the two government-sponsored enterprises 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 (FNMA) and Freddie Mac (FHLMC) are large agencies that purchase the bulk of U.S. residential mortgages from banks and other lenders, allowing them to free up liquidity to lend more mortgages.Jumbo loans are considered to be a riskier proposition than Conventional loans due to the fact that a larger sum of money is ‘spent’ on a single transaction vs. spreading that same dollar amount among multiple transactions.
Frequently Asked Questions:
Q: Why are rates higher with Jumbo Mortgages?
The rates are typically higher with Jumbo Mortgages due to the amount of risk associated with financing a larger property that may be more difficult to sell and recoup losses in the case of a default.
Q: What are the down payment requirements for Jumbo Mortgages?
Typically, down payments for non-conforming loan amounts can be 20% or higher of the purchase price. Generally speaking, the larger the purchase price, the more money the borrower will have to invest as a down payment.
Q: Do I have to pay Private Mortgage Insurance on a Jumbo Mortgage?
PMI is only required if he LTV is greater than 80%.