ABA Family Legal Guide

Buying and Selling a Home

Financing a Home Purchase

Different Types of Loans

What are jumbo loans?

Jumbo loans are loans that exceed a stated loan amount allowed by Fannie Mae and Freddie Mac, the federal agencies that oversee the secondary market in mortgage loans. Fannie Mae and Freddie Mac are not loan guarantors; rather, they purchase loans from lenders and resell the loans to other organizations, such as insurance companies and pension funds. The maximum mortgage amount for Fannie Mae and Freddie Mac loans varies and as of January 1, 2004, stands at $333,700. Interest rates on jumbo loans are typically slightly higher than other loans, but this is not always the case. A lender who intends to keep a jumbo loan mortgage in its portfolio, rather than selling it, tends to offer more competitive interest rates.