What Is an FHA Jumbo Loan?
An FHA (Federal Housing Administration) jumbo loan, also known as a nonconforming loan, is a loan in which the amount is greater than what is set by Fannie Mae and Freddie Mac (government-backed companies that help keep mortgages reasonable and stable).
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Risky Business
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Risky business. Jumbo loans are riskier because Freddie Mae or Freddie Mac will not purchase these loans. Since they are riskier, the loans are at a higher interest rate.
Money Down
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Jumbo loans are riskier. Since FHA jumbo loans are riskier, they require a 10 percent down payment on the mortgage and a credit score of 700 or higher.
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Fannie and Freddie Bought
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The City Dictates Fannie Mae and Freddie Mac will buy these jumbo loans if the cost of housing in a particular area is more expensive. New York and California would be such markets.
Qualifies
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Jumbo loan for a jumbo house. As of 2009, what qualifies as a jumbo loan is a loan for a mortgage that is more than $417,000 and tops out at $729,750.
Limit Setters
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There are limits. The Federal Housing Finance Agency sets the limits for FHA jumbo loans. The limit can go up, but it will not be lowered.
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References
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