A Jumbo Mortgage is a private residential home loan that exceeds the maximum conforming loan dollar threshold set annually by the Federal Housing Finance Agency (FHFA). Because Fannie Mae and Freddie Mac are statutorily prohibited from purchasing loans above the conforming limit, jumbo mortgages are held on commercial bank balance sheets ("portfolio loans") or securitized in the private-label secondary market.
Because jumbo lenders carry direct balance-sheet risk without GSE guarantees, underwriting requirements are substantially more rigorous: 1. Credit Score Thresholds: Typically requires a minimum middle FICO score of 700 to 720+ (740+ for optimal tier pricing). 2. Post-Closing Liquid Reserves: Borrowers must document 6 to 18 months of full PITI payments in liquid or retirement assets remaining *after* paying the down payment and closing costs. 3. Appraisal Scrutiny: Loans exceeding $1.5M–$2.0M frequently require two independent full interior appraisals to validate high-value collateral.