A jumbo loan is a type of mortgage that exceeds the limit set by government-sponsored entities like Fannie Mae and Freddie Mac. Because of its large size, it doesn’t qualify for standard backing, making it riskier for lenders. Jumbo loans are often used to buy high-value homes and usually have stricter credit, income, and down payment requirements. They can also carry higher interest rates than standard mortgages, reflecting their greater risk. Jumbo loans are ideal for individuals purchasing expensive properties who meet the strict qualification criteria.