A jumbo loan is a type of home financing that allows borrowers to buy luxury homes or refinance existing large mortgages by exceeding the loan limits set by the Federal Housing Finance Agency (FHFA). Jumbo loans allow you to have larger loans at a lower rate because it does not conform to the requirements set by the major mortgage loan companies Fannie Mae and Freddie Mac.
Your loan is considered a jumbo loan if the loan amount exceeds the acceptable limit to be considered as ‘conforming’ to Fannie Mae and Freddie Mac guidelines.