A jumbo loan is a conventional (not government-insured) mortgage loan that exceeds the conforming size limit for sale to Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) that buy and sell bundled mortgage loans. These limits vary by county. For example most counties in the Bay Area in Northern California or a comprairable county like Oragne County in Southern California, the 2022 conforming loan limit is $970,800. Any loan that exceeds $970,800 is considered a jumbo loan. In general, the mortgage qualification criteria is much stricter for jumbo loans simply because of the higher risk associated with the larger loan amount. Borrowers looking for homes that will require larger mortgages should have good credit, stable income, ample reserves and a manageable level of debt.Jumbo loans are mostly used by those purchasing higher-end or “luxury” properties. By design, conforming loan limits are usually set higher than the median home price within a particular county. In theory, this gives homebuyers plenty of properties to choose from without the need for a jumbo loan.

*VA Jumbo Loans Are Available as Well