Do you want to live in a luxurious home or buy an investment property, but you don’t have enough money to pay for it in cash? If you have to take out a mortgage, you will need to get a jumbo loan. Also referred to as non-conforming mortgages, these loans don’t have the same restrictions that conforming mortgages do. That means you can get the cash you need for an expensive property.
What Is a Conforming Mortgage?
Before you can understand jumbo loans, you need to take a look at conforming mortgages. Conforming mortgages refer to the mortgages that conform to the federal guidelines. Fannie Mae and Freddie Mac buy conforming mortgages from lenders, providing lenders with liquidity. That allows them to make more mortgages.
The government added a conforming loan size limit that caps the amount of money that lenders can provide. In California, conforming mortgages are limited to $580,750.
That means if you want to borrow more than $580,750, you have to get a jumbo mortgage.