JUMBO LOANS

A loan that is over the maximum amount for Fannie Mae or Freddie Mac or exceeds the conventional maximum loan amount limit is considered a Jumbo loan. The loan amount for a Jumbo loan can go up to three million dollars. Loan to values for Jumbo loans can range from a high of 95% down to 60% and will depend on the loan amount. Jumbo loans are offered in both fixed and adjustable rate formats. Other guidelines such as debt ratio, residence requirements and job requirements may apply.

When a borrower requires a loan that exceeds the Conventional loan limit of $359,650, they fall into the jumbo lending category. Most of the same underwriting guidelines apply but there are some significant differences.

One of the biggest difference is that the interest rates on Jumbo loans are higher. You can expect at least a 1/4% increase in the interest rate on a Jumbo loan. Though it's not desirable, it is usually acceptable to most borrowers.

2006 Conventional Loan Limits:

• above $417,000 for single family mortgage
• above $533,850 for mortgages on two-family properties
• above $645,300 for mortgages on three-family properties
• above $801,950 for mortgages on four-family properties
• Note: The limit in designated high-cost areas ? Alaska, Guam, Hawaii and the U.S. Virgin Islands ?will be 50 percent higher for first mortgages.