By definition, jumbo mortgages are loans that are larger than limits imposed by Congress that restrict the size of loans that Fannie Mae or Freddie Mac can buy, package and sell to investors as securities. These “conforming” loan limits are set annually and vary by location. Currently, loan limits for a single-family home in the contiguous 48 states vary from $424,100 to $636,150, based on home prices in each county.
Jumbo loans cost more because it is more expensive for lenders to securitize loans on the private market than it is for Fannie Mae and Freddie Mac. Mortgage-backed securities created and sold by these government-sponsored enterprises, or [...]