Other Advantages

Additionally, if and when a bidding battle breaks out, jumbo loans can give you an advantage over rivals. According to Joe DeMarkey, strategic business development leader at Reverse Mortgage Funding, "Jumbo mortgages are designed to allow borrowers to finance properties and homes in extremely competitive local real estate markets."

If you meet the requirements, a jumbo loan could be your ticket to purchasing a larger and more expensive property.

Jumbo loans are commonly available in amounts up to $2 or $3 million. Additionally, the criteria for obtaining a jumbo loan are less strict now than they were previously. Here is some information you should be aware of if you intend to purchase a high-priced property and believe you might require a jumbo mortgage loan.

Comparing traditional mortgages and government loans

Federal organizations insure loans that are backed by the government. In order to encourage lenders to provide mortgages to a wider spectrum of house buyers, this insurance covers the lender in the event that the borrower is unable to repay the loan. Many lenders that also provide government-backed loans offer conventional mortgages. Because conventional loans are not backed by the government, lenders typically perceive them as riskier, which is why they have stricter restrictions.

Government-backed mortgages come with additional requirements that may appeal to some homebuyers more than conventional mortgages.