Jumbo Mortgage

It is also known as a non-conforming mortgage. It is a loan that exceeds the maximum loan amount allowed by the most common mortgage investors. The current loan limit for a conforming loan is $252,700. Loans for amounts above $252,700 are considered non-conforming or jumbo mortgages. They typically carry a higher interest rate. The cost of obtaining a jumbo mortgage is generally higher than the cost of obtaining a conforming mortgage. Jumbo loans are ideal for those who want flexible rates and terms on a higher loan balance.

Jumbo mortgage loans offer as many financing options as a conventional mortgage loan. You can pick from a fixed-term loan to an ARM with one to ten years until rates lock in. You can also put zero down, have unverified income and assets, or no ratio test.

Before you apply for a jumbo mortgage loan, determine which type of loan is best for your situation. You can read up on loan terms on mortgage brokers’ websites.

Advantages: The loan balance for jumbo loans are above the maximum loan amounts established by Fannie Mae and Freddie Mac — thus jumbos are "non-conforming" loans. so if you want to buy a large, expensive house, you can use jumbo loans.

Disadvantages: The interest rates on jumbo loans are generally higher than rates on conforming loan.