If you’re looking to secure a mortgage for $417,000 or more, then you’re in the market for a “Jumbo” Loan! These jumbo mortgages refer to loans that are in excess of the limits imposed by government mortgage giants Fannie Mae and Freddie Mac. If the mortgage amount is higher than $417,000 (A few of the nation’s priciest counties impose higher limits), then you’ll be securing a jumbo loan which works a bit differently than traditional mortgages.
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A Jumbo Loan is typically considered a greater risk for lenders due to their high value, and they have historically charged higher interest rates. Luckily, however, the rate for jumbo loans is now around the same as a conventional loan. While some lenders require stricter buyer credentials for a jumbo loan (including higher credit scores and a greater down payment), these requirements have eased greatly as the housing market continues to recover. Additionally, interest on these loans is tax-deductible up to $1 million.
As home values increase, the number of buyers needing jumbo loans increases! Be sure to reach out to your lender for individualized assistance.