What is a Jumbo Mortgage?

A jumbo home loan, also known as a jumbo mortgage, is a type of financing that exceeds the limits set by the Federal Housing Finance Agency (FHFA) — currently $726,200 for a single-family home in all states (except Hawaii and Alaska and a few federally designated high-cost markets, where the limit is $1,089,300). Although they are nonconforming mortgages, jumbo loans still must fall within the guidelines of what the Consumer Financial Protection Bureau considers a “qualified mortgage”.

These mortgages are considered most appropriate for a segment of high-income earners who make between $250,000 and $500,000 a year.

Jumbos are considered riskier for lenders because they can’t be guaranteed by Fannie Mae and Freddie Mac, meaning the lender is not protected from losses if a borrower defaults.