Jumbo loan

A jumbo loan is a mortgage that lets you borrow more, but also increases your interest rate.

Expanded Definition

A jumbo loan exceeds the amount that government-backed lending entities Fannie Mae and Freddie Mac are allowed to buy from lenders. Mortgages under the Fannie/Freddie maximum have a lower interest rate than the jumbo loans, which are considered riskier.

The market for mortgages under the Fannie/Freddie limit is called the "conforming" mortgage market.

Related Fool Articles

• The Motley Fool Home Center. Information on buying, selling, refinancing, maintaining, and protecting your home.

Related Terms

• Mortgage
• Fannie Mae
• Freddie Mac
• Conforming loan
• Secondary market

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