Jumbo

Loans larger than $417,000 are called jumbo loans. Jumbo loans were hard hit by the financial crisis in late 2007, because the private secondary market into which most jumbos were sold largely disappeared. The pricing for these loans has returned to somewhat normal levels, which is typically about a .50% higher than a conforming loan.

Jumbo loans are securitized by institutions other than Fannie Mae or Freddie Mac. These securities carry more credit risk than those issued by Fannie Mae or Freddie Mac, and therefore, trade at a yield premium which is why they translate into slightly higher interest rates.