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What are jumbo loans?

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If you borrow at or below the conventional loan limit for non-government mortgages, you have what is known as a “conforming” loan. If the amount surpasses the loan limit that is set by both Fannie Mae and Freddie Mac -now $333,700 for a single-family home – you would then have a “jumbo” loan and pay a somewhat higher rate because lenders believe these larger loans carry more risk.

There are also loan limits on FHA and VA loans. Veterans who live in high-cost areas or who wish to buy or refinance a home loan above $240,000 can now use their VA status to do so. In instances where the new loan amount exceeds that price, the VA will allow the new loan amount to go up to $333,700 – if the veteran either puts down 25 percent of any amount over the $240,000 or has sufficient equity in the property to cover that amount.

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