Why are the Jumbo mortgage loan rates higher than the conventional loans?

Jumbo mortgage loans are typically larger than conventional mortgage loans and are not eligible for purchase or guarantee by government-sponsored entities like Fannie Mae and Freddie Mac. This means that lenders assume a higher risk when issuing jumbo loans, which is why interest rates for jumbo loans are generally higher than those for conventional loans.

Additionally, the larger loan amounts associated with jumbo mortgages mean that they are typically extended to borrowers with higher incomes and larger assets, but also tend to have less stable income sources or financial profiles that can lead to higher rates.

Lenders may also require a larger down payment or higher credit scores for jumbo loans, which can also contribute to higher interest rates. Overall, the higher interest rates for jumbo loans reflect the greater risk that lenders take on when financing larger and often more complex real estate transactions.

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.