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Jumbo mortgages are loans that have loan amounts that are greater than $417,000. The limit is set by Fannie Mae and Freddie Mac, and can vary, depending on their rules. This type of loan carries a higher interest rate than a conventional mortgage, because a jumbo mortgage is considered a higher risk loan. Many lenders require a large down payment for these types of loans.
If you are buying a home and financing more than $417,000, check with your lender to see if your area allows for a larger amount. Ask them what down payment is required in order for you to qualify for the loan. Once you know the amount the lender wants, you may still need a larger down payment to be sure the monthly payments are affordable.
If you are unable to get a jumbo loan, you may be able to purchase the home if you can arrange for a second mortgage. Your lender would finance your first mortgage for an amount below the jumbo limit, and then issue you a second mortgage for the remainder of the amount. Second mortgages are hard to find in difficult economic conditions, so plan to save.
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