Jumbo loans fall outside the loan limits set by Fannie Mae or Freddie Mac and therefore cannot be purchased by them. Jumbo loans are also known as non-conforming loans – they do not conform to Fannie/Freddie loan limits.
In most counties, a loan greater than $548,250 is considered a Jumbo Loan. In counties with high median home values, such as Los Angeles, San Francisco and New York, a loan higher than $822,375 is considered a jumbo loan. To find out which limit applies in your county click here.
Lenders consider jumbo loans to be riskier since Jumbo loans are not insured by the Government like the FHA loans, nor can they be sold to Fannie Mae or Freddie Mac.
Since the loan amounts are larger and considered riskier, jumbo loans generally have less-favorable terms (LTV, DTI, FICO score, etc.)
Require at least 3 to 12 months cash/liquid asset reserves.
Some jumbo loans may require a second appraisal.
Jumbo loans may take longer to close since they are manually underwritten and require more supporting documentation.