Jumbo Loans are classified as a Non-conforming loan, which is not saleable to FNMA or FHLMC due to two main reasons:
- Size of Loan. So-called Jumbo Loans exceed the maximum loan amount established by Fannie Mae and Freddie Mac for conforming loans.
- Credit Quality of Borrower. A borrower who doesn’t meet the minimum standards established by Fannie Mae and Freddie Mac may be classified as a B or C borrower. This might be someone who had a credit problem in the past, such as bankruptcy within the past seven to ten years; someone with late or unpaid bills; or someone whose credit scores are low because he owns multiple investment properties or has been self-employed for too short a period of time. Lenders may still offer loans to these borrowers, but the loan won’t be able to be sold to Fannie Mae or Freddie Mac.