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What is a jumbo mortgage?

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A jumbo mortgage is a home loan that is more than the conforming home loan limits set by Fannie Mae and Freddie Mac, says Bankrate. As of 2014, the threshold of a jumbo mortgage varies from $417,000 to $625,500 depending upon the location in which the home is purchased.

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Homes purchased with a jumbo mortgage tend to be larger, single-family residences, explains Bankrate, and jumbo mortgage borrowers face strict qualification standards, including large down payments, low debt-to-income ratios, and up to six months of mortgage payments in reserves. Since there is no private mortgage insurance for a jumbo loan, higher credit scores and proof of assets are also essential.

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