What is a jumbo loan?

A jumbo loan is a type of mortgage loan offered in California that is larger than the conventional loans offered by most lenders. These larger loans are also known as non-conforming loans, as they exceed the maximum limit set by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC). Jumbo loans usually require a higher down payment, a higher credit score, and a higher income than the limit set by FNMA or FHLMC, which can make them difficult to obtain. In California, jumbo loan rates tend to be higher than rates for conventional loans, as the lenders assume a higher risk. They come with more stringent requirements and more stringent underwriting criteria from the lender. Generally, borrowers must have excellent credit, sufficient liquidity, and a high debt-to-income ratio. Jumbo loans are often used to purchase expensive homes, vacation homes, or to refinance a conventional loan that is too small to cover the cost of the desired residence. It can also be used to purchase an investment property, cover expensive repairs, or cover college tuition. Given the higher risk associated with this type of loan, lenders often require additional forms of collateral or a cosigner in order to secure the loan. Borrowers should do their research when considering a jumbo loan, as some lenders may offer higher rates or different terms than others.

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What is a jumbo loan?

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