A jumbo loan is a type of mortgage that exceeds the conforming loan limits set by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, which are regulated by the Federal Housing Finance Agency (FHFA). These loans are typically used to finance high-cost properties in areas where real estate prices surpass the federal loan limits. Jumbo loans come with stricter qualification requirements, including higher credit scores, lower debt-to-income ratios, larger down payments, and additional financial reserves. Due to their size and the risk they pose, jumbo loans are not eligible for purchase by GSEs and usually carry higher interest rates. It’s important to stay updated with the FHFA for current loan limits that may affect the classification and availability of jumbo loans.