What constitutes a jumbo mortgage loan? Jumbo mortgages are loan amounts higher than the allowable loan limits by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Because of the higher loan limits, jumbo mortgages carry slightly higher rates. Jumbo loan limits can change annually depending on home values.
There are even super jumbo loan limits. Super jumbo loan limits are obviously greater than the jumbo mortgage loans. Super jumbo mortgages are usually fixed for a limited number of years before they become an adjustable rate.
Jumbo and super jumbo mortgages are not funded by FNMA or FHLMC. They are actually bundled up into packages and resold to investors on Wall Street. Because of this, loan qualifications are more stringent for borrowers.