Glossary
Jumbo loan
A mortgage larger than the conforming loan limit, which cannot be bought by Fannie Mae or Freddie Mac — so it carries stricter terms.
A jumbo loan exceeds the annual conforming loan limit set by the FHFA (which varies by county), putting it outside the government-sponsored mortgage system. Because lenders keep more of the risk, jumbos typically require stronger credit, larger down payments, and more cash reserves than a conforming loan — though their rates are often surprisingly competitive. They are the standard route for financing high-priced homes that a conforming mortgage cannot cover.
Related terms
- Fixed rate An interest rate that never changes for the life of the loan — your payment is the same every month.
- Credit-builder loan A small loan whose proceeds are held in a locked account while you make payments — designed purely to build a payment history.
- Amortization The schedule that splits each payment between interest and principal. Early payments are mostly interest; the balance flips near the end of the term.
- Short sale Selling a home for less than what is owed on the mortgage, with the lender's approval — an alternative to foreclosure.
- Wage garnishment A court- or agency-ordered deduction taken directly from your paycheck to repay a debt — the end stage of an unresolved default.
- Hard inquiry A credit check triggered by a real application, which can cost a few points and stays on your report for two years.