What Is a True Jumbo or Super Jumbo Loan?

Loans falls into distinct categories based, in part, on their amount. It can be helpful to know a bit about what types of loans are available and in what types of situations:

The Conforming Loan. What does conforming mean? This simply means the loan conforms to Fannie Mae and Freddie Mac guidelines. So these giant agencies will buy loans now up to $729,750. But keep in mind that a $417,000 loan or less will get you better interest rates, usually a .25% lower than loan amounts above that and up to $729,750.

So conforming loans are up to $417,000, and then we have the new bracket called conforming jumbo up to $729,750. These are for a single unit only. Loans amounts are higher for 2 to 4 units.

Now what happens once we get over the $729,750 loan amount? Do we drift in space just hoping we find our way home? It’s not that bad, actually it can be great. For example if you have a middle credit score of 760 you can possibly get a $2,000,000 loan with only 20% down. You will need to have 6 months of your monthly housing debt in reserves too. And with 25% down it is possible to get a $3,000,000 loan. Same 760 credit score requirement but now you will need 24 months reserves. And if you need to go as high as a $5,000,000 loan it is possible to get a loan with 30% down. The beauty is that the rate is the same for a loan amount from $729,751 to $4,000,000. No additional rate increase. That’s great. And for loan amounts over $4,000,000 to $5,000,000 there is only an .125% increase to the rate.

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