Jumbo loans exceed the maximum conventional loan amount established by Fannie Mae and Freddie Mac. They are available as fixed rate mortgages, adjustable rate mortgages, or negative amortization mortgages.

These type of loans facilitate the high-end purchase of expensive homes, vacation homes, investment property and upscale luxury homes. They are very attractive for primary occupants or investors who want to leverage their assets.

For 2006 jumbo loans are home loans that exceed $400,000 for single family homes (amounts are higher in Hawaii and Alaska).

For duplex, the conforming loan limit for 2006 is $533,850, $645,300 for three-family residence, and $801,950 for four-family homes.

Jumbo loans that are sold to investors on the secondary market are not created by the quasi-government agencies Fannie Mae and Freddie Mac.

Because of this, the investors perceive these loans as a little more risky and demand a slightly high rate of return. This is why the interest rates on Jumbo loans are normally .25% to 1% higher than their conforming counterparts.

2006 Jumbo loans will start at $418,000

The Jumbo loan limits can change at any time. To know what the limit is at currently, call your mortgage broker.