A jumbo mortgage is a home loan that exceeds the limits set by Fannie Mae and Freddie Mac. Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are the two main agencies that purchase the majority of residential mortgages in the United States. They set a limit on the maximum dollar value of any mortgage which they will purchase from an individual lender. Jumbo mortgages (non-conforming loans) generally have a slightly higher interest rate than smaller (often called "conforming") mortgages. The limit for the jumbo mortgages used to be $417,000, but in certain states such as California and Florida that limit was not realistic. Because of this, there are new limits to jumbo loans for high-cost areas are: $729,750.
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