Jumbo Loans for Beginners

A jumbo mortgage sounds like the stuff of millionaires, but that's not necessarily true. While it is a larger debt than most home mortgages, a jumbo loan may be your best choice, depending on your income, the price of the home you want to buy and the menu of loan options available to you.

Learn what a jumbo loan is, how to get one and whether it's a smart move for you.

What is a Jumbo Loan?

A jumbo mortgage, also called a jumbo loan, is a mortgage that exceeds conforming loan limits set by the Office of Federal Housing Enterprise Oversight. Conforming loan limits cap the dollar value on loans that are backed by a government-sponsored program or enterprise.

"A nonconforming loan is any mortgage that doesn't fit in the Fannie Mae, Freddie Mac and FHA box," says Stephen Moye, senior loan officer at Citywide Home Loans. "'Jumbo' means the loan exceeds the loan limit set for the metro area where the home is located."

How Big Is a Jumbo Loan?

A mortgage doesn't have to be seven digits to be called a jumbo loan. A loan amount of even $1 more than the loan limit for your county puts it into jumbo loan status.

In the vast majority of U.S. counties, the conforming loan limit for a one-unit property in 2018 is $453,100, but some counties have higher limits, so a jumbo loan in one city can be a conforming loan in another. Conforming loan limits are higher in high-cost areas like Northern California and New York City, and highest in Honolulu, at $721,050 for a one-unit property.

Limits are tied to local median home values, and you can find the limit for each county on the Federal Housing Finance Agency's website.

According to Zillow, some lenders categorize any loan above $453,100 as jumbo, even if the conforming loan limit for your county is higher.