Jumbo Loans: What's the Difference?

Real Estate Broker/Owner with Chateau Properties TN# 313915

I had a client ask me today, "How is a Jumbo Loan different?"



After explaining the key differences, I thought I would share it will all of you.

A jumbo loan is any mortgage written for an amount above the conforming limits. Conforming limits are set by Fannie Mae and Freddie Mac. Fannie and Freddie purchase the bulk of mortgages from banks and other lenders so that they can turn around and use the cash to loan more mortgages. The future of Fannie and Freddie is uncertain right now, but that is a completely separate topic we'll go into on another post.


Currently the conforming limit in Tennessee is $417,000. So any amount loaned above $417,000 is considered a jumbo loan, and therefore riskier for investors since Fannie and Freddie won't purchase the loan. Lenders know that they need to be able to loan above the conforming limits in order to capture the market, so instead of refusing to lend above $417,000 they will charge a premium interest rate, require a larger downpayment, and have implemented stricter guidelines to make sure the buyer is able to pay the loan back.

Here is a little chart showing a comparison between Jumbo loan features and Conventional.

As you can see, Jumbo loans have more stringent requirements, but the good news is if you need to borrow more than $417,000 it is possible!

Also, it's important to note that jumbo lenders all have different criteria for Jumbo loan lending. Make sure you contact someone who can offer a wide variety of lenders versus going into a bank that only sells their products.

To learn more about Jumbo Loans, or speak to someone about making your next move, contact us at 615-538-7005. Or email us at info@chateauproperties.com

Visit our website anytime at: www.ChateauProperties.com

Source: Jared Prichard with SWBC Mortgage. Call him at 615-577-5200 or email him at jprichard@swbc.com

*This information is based on today's mortgage market. Since the rates and guidelines are always changing, make sure you contact us for updated information.    


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Robert Bob Gilbert
Berkshire Hathaway HomeServices Anderson Properties - Katy, TX
Your Katy TX ( West of Houston) Real Estate Expert

Alright.. Thanks for the info about Jumbo loans.. 

May 20, 2011 10:32 AM #1
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

I think your numbers are off.

You are showing min down on a jumbo at 3.5% (the FHA min dn pmt %) and 10-20% for conventional. You are aware you can do 5% or less on conventional, correct?

Also you could add the tighter DTI requirements for jumbo and the larger reserve requirements to the list


Thought I'd share this so you could correct...

May 20, 2011 10:35 AM #2
Greg Cooley
Chateau Properties - Franklin, TN

Fixed it! Thanks:)

May 20, 2011 10:49 AM #3
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