What is a Jumbo Loan?
A jumbo loan is a conventional loan for an amount greater than the “conforming loan limit.” Jumbo loans cannot be purchased, securitized, or guaranteed by Fannie Mae or Freddie Mac, which means they are perceived to have more risk for the lender.
What is a “Conforming Loan Limit” on a Jumbo Loan?
For the year 2013, $417,000 is the conforming loan limit. The Office of Federal Housing Enterprise Oversight (OFHEO) sets the conforming loan limit annually, so it is always subject to change.
Interestingly enough, you would normally expect to pay a higher interest rate for a jumbo loan. But currently, there are lenders offering jumbo loans at lower interest rates than traditional loans backed by Freddie Mac or Fannie Mae.
Also, in counties with high home prices, your conforming loan limit may be different. Check this map by Bankrate for your state and county.