What is Jumbo Loan?
A jumbo loan is a mortgage that exceeds the conforming loan limits set each year for conventional loans. Because the amounts are larger and not backed by the usual government-sponsored programs, lenders generally require stronger credit, larger down payments, and more cash reserves. Jumbo loans are common in higher-priced California markets.
Example: A buyer purchasing a $1.8 million home borrows above the local conforming limit, so the financing is structured as a jumbo loan with 20% down and extra reserve requirements.