What is it? Jumbo mortgage loans are 30-year fixed-rate loans too big to be bought and repackaged by mortgage giants Freddie Mac and Fannie Mae for resale to investors. Banks that issue jumbo mortgages have to hold onto the debt themselves, thus incurring more risk (which is compounded further by the large amount of money at stake).
As a result, jumbo borrowers can expect not only a higher interest rate on their loans, but also more difficulty finding lenders.
Who is it good for? Buyers of large, expensive or midrange homes in areas of the country where housing is more costly.