What is a jumbo loan?

A jumbo loan is a large mortgage for a home or property that exceeds a certain amount. These types of loans are usually used to purchase high-value single family homes that require a home loan that is higher than the limits usually imposed by government-sponsored lenders.

Qualifications for jumbo loans are stricter than for regular loans, since the lender is taking a bigger risk due to the amount of money being financed. One issue is getting an appraisal that justifies the home loan amount. This is necessary when the asking or offered price on the property is higher than its appraised value. Applicants also need a higher income, credit score and down payment than are required for a typical home loan.