Fannie Mae, Freddie Mac, and their regulator, the Federal Housing Finance Agency (FHFA), set a maximum loan amount for loans that they would be buying from lenders that generate those loans.

Jumbo Loans

A jumbo loan is a type mortgage that exceeds the limits set by the Federal Housing Finance Agency and it cannot be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac.

The loan limits are $726,200 on Conforming Loans in the year of 2023, while they can go as high as $1,089,300 in some high-cost counties in continental United States and Puerto Rico, and higher still in Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

Mortgage loans are allowed to exceed the Conforming and the so-called Non-Conforming loan limits. Loans above these limits are called Jumbo mortgages. The cost of obtaining a Jumbo Loan might be higher than the cost of obtaining a mortgage with a Conforming loan amount.

The advantages of obtaining a Jumbo Loan are access to higher loan amounts that the so-called Conforming Loan Limits.
The downside of a Jumbo Loan is that the approval process is more stringent and requires a stellar credit history and scores above 700  as well as lower debt-to-income ratios (usually bellow 43%).

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